ETHUSD update: Higher low forming inside resistance zone while momentum remains bullish. On top of that, there is a bullish pin bar that may signal further buying for a potential higher high.
While BTC has a somewhat similar formation, this market happens to be inside a resistance zone while BTC is not. As I write continuously, best practices say buy supports, sell resistances, but always remember to consider context. In the current situation, there is a bit of a conflict. There is a shallow higher low forming within the 741 to 845 resistance zone (.618 of recent bearish structure). Often higher lows lead to higher highs, and in this case, since momentum is clearly bullish, it is within reason to expect this resistance to break.
With that being said, I believe this market will follow BTC which is in a slightly better position to rally which can lead this market into the next reversal zone defined by the 876 boundary. Although a shallow higher low is a very aggressive trade, we are not issuing a buy signal for this market (especially since a signal was issued on BTC. See S.C.).
The more attractive location for a swing trade long is the 656 support (.382 of current bullish structure). Price may not retrace back to that level though, especially if BTC pushes its resistance zone. This is a tough call because as all the coins are poised to go higher, this particular market is less attractive because of the risk associated with such a location.
Best practices offer a general guide to positioning yourself alongside the intent of the market. Buying a strong market, one that makes higher lows and higher highs is appropriate, but context is an important consideration when it comes to assessing the risk. And when I mention risk, I am not just talking about the possible loss, but also the probability of the trade following through which is a different and tough to evaluate variable. If we are going to call an aggressive trade, we would rather choose BTC since it is in a more attractive position compared to this market. Remember, the purpose of these posts is to provide insight and perspective, because when it comes to taking risk, you have to be able to do that within the boundaries of your own tolerance and trading process. You must be able to make your own independent decisions, and know exactly why you make them and recognize when the market is not cooperating quickly. Check out S.C. for more.
It’s funny how when the price is at resistance we feel like it’s going to keep going up and when it’s down at support we feel like it’s going to keep going down. Hard to explain until you feel it. This last 4 weeks has shown us both. I think I’m going to stop paying attention to the price and just look at where it’s at in the cycle. Maybe I’m totally wrong but I think the market is telling us we’re going down.
Amit26
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@IkemenJ, Wish it was that simple :) However in reality the market often breaks the rules, resistances are broken and supports dont hold.
theredbaronZ
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@IkemenJ, You are right about this feeling. I think the tendency is to think trends will continue. This leads to FOMO and panic selling in the herd. As long as one is aware of the feeling one can counter it with rational decisions and not let these feelings rule our trading.
TheGush
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@IkemenJ, lol yes this feeling is very real. But this can also cause a lot of missed opportunity.
I’m not saying to take undue risk, but if a support seems so solid as the 730 area for ETH now, I would feel that this level may be a good buy level. But that is purely my own feeling. I would like to see a dip to $650 levels, but having watched ETH savagely defend the $700-$730 support level so many times, it is beginning to convince me that it may be a good entry.
But knowing myself, I will wait for the drop to $650 that may likely not even happen. And I also believe you’re right- that even if we did see that area, I don’t think it will go past that. $500-600 area just doesn’t seem to be where the market wants to go, IMO. I suppose we will see. But even here, yes, you’re looking at an easy 2x return when we test the ATH again.
My advice to myself has been to never try and sell the absolute top or buy absolute the bottom. You will miss them almost every time without a lot of good luck. Better to buy a little higher and sell a little lower than you expect to preserve profits. Better to make a decent amount of money than try and squeeze another $10 out of it and end up losing 30% potential profit. Greed is an enemy that will get you rekt every time.
STPAUL007
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Wired. Potential 100$ up is not worth it to enter ? 590 didn’t happen. 656 will not happen either. ETH stronger then BTC and has more potential in money putting in even at this levels, almost x2 by profit.
Ragnar_Dragneff
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Ibrahimdmrkl
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@Ragnar_Dragneff, hey I am beginner which indicators you are using to create the whole chart?