ETHUSD update: Now that a positive catalyst has once again sparked a BTC rally (no surprise) this market has more context to rally even though it has been somewhat sluggish compared to BTC and LTC respectively. The good news is this market is coming off a major support zone with momentum that is backed by supportive structure. How do you buy if you missed the trigger?
During the minor retrace lead by BTC, this market retested the 872 to 739 major support zone (.618 area of broad bullish structure). Within this area the 824 level (.382 of recent bullish structure) was also tested which lead to an outside bar. This configuration is not only a very bullish sign (the newly formed bullish trend line) but it was followed by a minor higher low that served as a long trigger within the major support zone.
I did not write about this particular trigger because I was more focused on BTC and LTC opportunities, I also did not take this trade because I was not overly enthusiastic about this market's lack of responsiveness. So the big question: Is now still a good time to buy?
The answer depends on your outlook and how much pain you are willing to take. 816 is the current swing low and reference point to measure risk from. And that is the lower risk swing trade perspective. If you are looking to enter for a broader move, you have to be okay with the possibility of price retesting the 739 lower boundary of the broad support zone (it can happen). This increased risk means if you are too aggressive with your size, or too nervous about pull backs, you are more likely to get shaken out if any bearish drama follows.
If the momentum is bullish, shouldn't price just keep going now? Why worry? Speculating in any financial market is like playing a game of musical chairs, once the music stops, you better be close to a chair. In trading this means you must always consider your position if everything falls apart and then ask yourself if you can handle it. What can go wrong in this market? The 921 resistance is still in play and beyond that the broad bearish trend line in the 940 area also stands in the way. With bullish momentum supporting price, these resistances are more likely to break, but IF they don't, especially if price action forms a lower high, that would make this market more vulnerable to bearish catalysts or short term drama.
In summary, the overall market structure at the moment is more of a consolidation than a clear trend (as defined by the converging trend lines). This broad triangle is one giant continuation pattern in my opinion, and offers plenty of bullish potential if you are able to hang on during the over reactive pull backs. A break of the lower boundary of this broad triangle is not a major bearish sign, but it could lead to the retest of lower supports especially in the face of any newly formed head and shoulders pattern. I only mention the bearish possibilities because they are important to recognize when assessing the type of risk you are willing to take. Overall I am bullish on this market, it is just a matter of waiting for a price that is in line with my criteria, especially since I am holding other positions that are correlated to this market generally.
"Overall I am bullish on this market, it is just a matter of waiting for a price that is in line with my criteria" - spot on!
MarcelMartins
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@SuperMegaMarvellous, I agree, unless you're a day trader, there is no need to use stop loss orders on ETH, just wait.
stevewalkr
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Marc, many thanks for the great analysis...
If you have time could you provide an update on this aspect on ETH... If you have longterm ETH holdings, but would like to maintain sensible stops so that in event of a dramatic fall or revisit of BTC 5900, what would you advise stop trigger points to be?
Using your TA here I find it easy to setup margin trades - for example, look to buy in at 816 assuming current swing plays out, and maintain a tight stop against that. I'm protected, all is under control. Entry and exit points defined, risk known.
But ironically, with my longterm holdings I feel less secure - because they dont have such a specific entry (holdings bought over a period of time), I find it much harder to establish sensible ejector seat policies.
I appreciate you are busy - but if you had time to provide a long-term holding ladder out policy guide/advice, that'd be greatly appreciated.
Kind regards, Steve.
siwe7
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Hi, thanks for your helpful analysis. i prepare for BTC to break the downtrend channel and then checking for an entry point in ETH, because if BTC drops, ETH will drop too, even if ETH is in an upwards momentum.
it is a pity, that all cryptos are so strongly coupled.. because otherwise i would invest in ETH with almost any doubts
RaulPuiu
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Looks like a tight squeeze between 872 and the uptrend line.
The market must soon decide.
TK-does-stocks
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Amy reason why you're chosen Bitfinex to show your chart? between it Kraken and Coinbase which shows this scenario..
TK-does-stocks
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Sorry for the typos, its been a long day..
FatherGrumpy
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Thanks Marc. I have been patient and can continue to wait. Bought a small amount at 790. Trying to determine a good selling point. continuing to wait.