ETHEREUM (ETHUSDT) DAILY BUY&SELL TRADE 2020/12/28
Updated
Market Overview
- After a few days of mostly sideways price action as Bitcoin was rallying, ETH finally started to catch up and pump as well. BTC and ETH are highly correlated, but sometimes one leads the other, giving us an opportunity to enter a trade on the laggard instead of chasing the coin that has already moved, which gives us a much better risk reward trading opportunity.
- Price has broken above the previous high of $670, established a new high of $717, retested the previous high of $670, flipping it from resistance to support, and is now consolidating near the new high of $717
- The two main levels immediately significant on the charts that we want to focus on are the highs of $717 and the 200MAs in the $655-665 zone. We will be looking for trading opportunities in these two areas, and I've laid out three potential trade setups in detail below
Trade Recap
Yesterday was a great day for trading and I hope many of you booked handsome profits. The first trade we had was when price tested the 200MAs in the $630 zone and successfully bounced up, giving us a 4:1 RRR win. The second trade we had was when price broke above the previous high of $670 and then retested it as support, and has given us so far a RRR of over 2:1. If you had taken both trades and risked 1BTC on each trade, you could've made 6BTC in profits yesterday. There will be more trading opportunities like these; follow ,e if you don't want to miss them.
Long Trade Setup #1: Retest and Continuation
To open a long position, we are waiting for price to retrace back down to test the 200MAs and then continue moving up.
Trade Entry Confirmation:
1. Price Action: Price needs to move back down to the 200MAs and bounce back up (200MAs currently projected to be $655-$665 zone).
2. Candlestick Pattern: A bullish candlestick pattern such as a bullish engulfing candle, a pinbar, or a multiple candlestick breakdown (a large red candle followed by multiple green candles that eventually close above the open/high of the large red candle)
3. Volume: Above average volume on the bullish engulfing candle, pinbar, or on any of the multiple green candles that eventually break the red candle (ideally on the candle that breaks)
4. MACD: MACD histogram bottoming out, as indicated by the histogram becoming less negative (changing from red to pink)
Long Trade Setup #2: Breakout and Continuation
To open a long position, we are waiting for price to break resistance, move back down to test previous resistance as support and then bounce back up.
Trade Entry Confirmation:
1. Price Action: Price breaks above the high of $717 with force, creating space between the price and $717, falls back down to $717 and bounce back up.
2. Candlestick Pattern: A bullish candlestick pattern such as a bullish engulfing candle, a pinbar, or a multiple candlestick breakdown (a large red candle followed by multiple green candles that eventually close above the open/high of the large red candle)
2.1 Ideally Engulfing / Break candle has a large candle body with small wicks
2.2 Ideally Engulfing /Break candle closes near the highs of the candle
3. Volume: Above average volume on the bullish engulfing candle, pinbar, or on any of the multiple green candles that eventually break the red candle (ideally on the candle that breaks)
4. MACD: MACD histogram bottoming out, as indicated by the histogram becoming less negative (changing from red to pink)
Short Trade Setup: False Breakout
To open a short position, we are waiting for price to break above the horizontal resistance @ $717 and then fall back down.
Trade Entry Confirmation:
1. Price Action: Price breaks above the high of $717 and then rapidly falls below $717, forming a bull trap
2. Candlestick Pattern: A breakout candlestick (candle close above $717) followed by a breakdown candlestick (candle close below $717)
2.1 Ideally breakout and breakdown candlesticks are consecutive candles, but can also have a few candles in between the two
2.2 Ideally the breakdown candle has a large candle body with very small wicks
3. Volume: Above average volume (volume above the average volume line) on both breakout candle and breakdown candle, ideally the breakdown candle's volume is a local high
4. MACD: MACD histogram topping out, as indicated by the histogram becoming less positive (color changing from dark green to light green)
Entry Confirmations:
Ideally we get all confirmations for an entry, but sometimes we might take a trade when we have fewer confirmations. The more confirmations, the higher the win probability, though it also means you miss out on some profitable trades if you're only taking trades when we have all confirmations. It's up to your own risk appetite to decide when you feel comfortable entering a trade. You can also adjust position size based on level of conviction, entering a bigger position when there are more confirmations. Make sure you practice proper risk management and money management.
Trade Management:
I have put in preliminary Stop Loss and Take Profit on the chart, but these will depend on how the entry setup forms, so I will update when we have a valid entry signal.
Stop Loss: We typically put a SL around the high / low of the entry area, though we might adjust based on market conditions such as high ATR ( average true range ) or long wicks.
Take Profit: We typically aim for at least a 2:1 RRR (risk reward ratio), but you can decide to take profits earlier, adjust stop loss as we get into profit, take partial profit, leave a small portion for larger gains, etc. How you want to manage depends on your own risk appetite and what you are comfortable with.
MAKE SURE YOU FOLLOW ME SO THAT YOU DONT MISS TRADE SIGNALS, GET THE LATEST SL AND TP LEVELS, AND FOLLOW THE TRADE PLAY OUT IN REAL TIME!
DISCLAIMER: I'M NOT A FINANCIAL ADVISOR AND THIS IS NOT FINANCIAL ADVICE, AND I WILL NOT BE RESPONSIBLE FOR YOUR WINS OR LOSSES, DYOR.
Note
Price has entered our area of interest and testing the resistance @$717. Lets see how price reacts to see if we get a confirmation for trade entry.Note
ETH has rallied hard past 717 and has established itself above that high. The false breakout trade setup can be ignored for now. We will be looking for a potential entry on the retest of 717.Note
Potential long entry signal here on eth as we bounce off previous resistance as support. Need to see how this 15min candle closes, and ideally some more volume comes in to validate the strength of the bounce.Note
Bounce here a bit weaker than ideal, would’ve preferred higher volume and for the close to be closer to the highs of the candle. As a result, the risk here is quite high, but if you are aching for a trade and did want to enter, you can enter at market price, set stop loss ~717 and aim for first take profit ~740 and then the rest at 750+.
Again, warning, this isn’t an ideal entry, and you enter at your own risk.
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