ETHUSD Update: Price reaches the 286 support area and rejects it with an initial push back to 310. This may be the beginning of a bullish reversal formation on the larger time frame and I am WATCHING carefully for a new swing trade long.
BTC and the rest of the markets broke supports and pushed lows, which is interesting because when BTC pushes highs, these markets are not so quick to follow, but when it is pushing lows, the follow the leader behavior shows up again. With that being said, this market has reached even more attractive support areas for a swing trade long.
The 295 support is the .382 of the entire bullish swing which broke but the 286 level which is an area of repetitive buying not only held, but got a rush of bullish price action taking this market back up to 310. Often sharp bounces like these are the beginning of a momentum change, in this case back to bullish.
The other great thing about this situation is risk can be clearly defined by the 286 level. So my plan is to wait for a retrace possibly back to 300 or slightly below and look for a swing trade long entry. If a price area between 300 and 295 can show a bullish candle, I will look to go long in that area with a STOP AT 284. Once again to control risk, I will start with a smaller position of 25% of my usual position size. My target area is in the high 330s. Reward/risk is about 2.5/1. Also if I manage to get long and price is behaving the way it should, I will look to buy the other 75% of the position upon an upside break of 310 (AFTER I am in my initial position, otherwise I stay FLAT).
Buying into bearish momentum is a process that requires strict attention to risk. It is possible for this market to keep selling if the 286 level is taken out again. The next support is in the 258 to 232 zone which is the .618 of the entire bullish swing.
If price retests the lower support zone, that would signal to me that a consolidating market is more likely to follow rather than a retest of the highs. Either way, that area can offer swing trade opportunities as well (adjusted with more conservative targets).
In summary, sell offs such as these are where the lower risk buying opportunities often reveal themselves, not at the highs especially when everyone is "painting rockets" as one trader once so eloquently described. It isn't easy though because the randomness of the market is always throwing curve balls, that is why keeping risk minimized is so important during a time like this. Absorbing small losses while seeking to buy into a supportive area is not that uncommon, especially with the amount of emotion that leads to large price spikes. I will be watching the low 300s to 295 area for reversal signs and look to reenter long there if my criteria is met. Let's see what happens.
Comments and questions welcome.
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I am long again (50% of position size) at 309.95. Stop 294 and target 335. I am going to write about it in my upcoming report.
What you said I think is very accurate regarding price action of Bitcoin and how the rest of the market typically plays follow-the-leader as Bitcoin moves lower.
With this in mind, if we look at Bitcoin's chart, it has no support structure for the recet bullish move. It blew past 5k to 6k and has never gone back to test 5k and establish support. And as we know, previous resistance usually becomes subsequent support in order for any subsequent bullish structure to be properly supported. Consequently, I am thinking we are heading down to establish a 5k support zone for Bitcoin. This will result in all the other alts selling off as well due to this follow-the-leader nature of the crypto market, especially in corrections.
As such, I have to ask myself, what sort of Ethereum price would I expect for a Bitcoin price around 5k? Answering that question may suggest where Ethereum is headed in the short-term before the Bitcoin Gold October 25 hardfork.
But then, as we approach Oct. 25, I would expect a bounce back to 5.5k or higher (and similar bounces in Ethereum and alts) in anticipation of the Bitcoin Gold hardfork, because, well, everyone seems to want their free Bitcoin Gold.
Iruwen
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@dalmazio, Bitcoin Gold might have become non-news by now, even many crypto guys on Twitter and reddit didn't realize there are two hardforks... and there seems to be almost zero support for it right now, not sure if there's any exchange supporting it at all, but a lot of bad press. Still people might run for it though, we'll see soon.
dalmazio
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@Iruwen, yeah, for a lot of people, if it doesn't cost them anything, they may simply hold onto their Bitcoin through the October 25 fork, or make sure they're holding, before October 25, thinking Bitcoin Gold may be the next Bitcoin Cash — just in case. If they're wrong, and Bitcoin Gold ends up being a dud, no harm, no foul. If they're right, could be an instant ~10% return on investment.
@dalmazio, you're welcome. Yeah these hard forks and other fundamental events are certainly changing relationships quickly. Often in these situations, I rely more on the chart information to clue me in rather than try to figure out this forking situation. Hehe.
dalmazio
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@MarcPMarkets, :) Definitely. My TA skills are not yet so refined as to be able to condense so much fact from the vapour of TA nuance! Only to some degree. And Elliott Waves + Fibonacci is my primary tool for that, which I have to thank you for putting me on — quite the rabbit hole. But I still need to look elsewhere to fill in the missing bits when things are unclear. Ah, to be able to "see" the entire conversation in the patterns. That's the holy grail!
JK2703
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Marc, Morning - just wondering - why is ETH around 300/290/272 while BTC has double/triple topped ATH and still above 5000. What I observed in the past that if BTC falls, all the crypto are impacted by it but when BTC rose to 6200, ETH didn't had any impact from that.. only XRP rose till .2900 level.. What do you think, when would we be able to see ATH in ETH?