ETHEREUM (ETHUSDT) DAILY BUY&SELL TRADE SETUPS 2020/12/25
Updated
Long Trade Setup #1: Retest and Continuation
To open a long position, we are waiting for price to move up a bit, then retrace back down to test the 200MAs and then continue moving up.
Trade Entry Confirmation:
1. Price Action: Price needs to move up enough to create space between price and the 200MAs (projected to be $605-$615 zone) before moving back down to the 200MAs and bouncing.
2. Candlestick Pattern: A bullish candlestick pattern such as a bullish engulfing candle 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 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: False Breakdown at Horizontal Support
To open a long position, we are waiting for price to hit horizontal support @~$551 and then bounce back up.
Trade Entry Confirmation:
1. Price Action: Price breaks below the lows $551 and then rapidly moves above $551, forming a bear trap
2. Candlestick Pattern: A breakdown candlestick (candle close below $551) followed by a reclaiming candlestick (candle close above $551)
2.1 Ideally breakdown and reclaiming candlesticks are consecutive candles, but can also have a few candles in between the two
2.2 Ideally the reclaiming candle has a large candle body with very small wicks
3. Volume: Above average volume ( volume above the average volume line) on both breakdown candle and reclaiming candle, ideally the reclaiming candle's volume is a local high
4. MACD: MACD histogram bottoming out, as indicated by the histogram becoming less negative (color changing from red to pink)
SHORT TRADE SETUP : FALSE BREAKOUT
To open a short position, In this scenario, we are waiting for price to break above the horizontal resistance @ $670 and then breakdown.
Trade Entry Confirmation:
1. Price Action: Price breaks above the high of $670 and then rapidly falls below $670, forming a bull trap
2. Candlestick Pattern: A breakout candlestick (candle close above $670) followed by a breakdown candlestick (candle close below $670)
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)
NOTE: There is also an intermediate level, the 61.8 Fib retracement @ $625 which might prove to be a minor resistance where price will struggle, with a possibility that price would be rejected at this level and move down, so its also an important level to keep in mind.
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.
To open a long position, we are waiting for price to move up a bit, then retrace back down to test the 200MAs and then continue moving up.
Trade Entry Confirmation:
1. Price Action: Price needs to move up enough to create space between price and the 200MAs (projected to be $605-$615 zone) before moving back down to the 200MAs and bouncing.
2. Candlestick Pattern: A bullish candlestick pattern such as a bullish engulfing candle 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 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: False Breakdown at Horizontal Support
To open a long position, we are waiting for price to hit horizontal support @~$551 and then bounce back up.
Trade Entry Confirmation:
1. Price Action: Price breaks below the lows $551 and then rapidly moves above $551, forming a bear trap
2. Candlestick Pattern: A breakdown candlestick (candle close below $551) followed by a reclaiming candlestick (candle close above $551)
2.1 Ideally breakdown and reclaiming candlesticks are consecutive candles, but can also have a few candles in between the two
2.2 Ideally the reclaiming candle has a large candle body with very small wicks
3. Volume: Above average volume ( volume above the average volume line) on both breakdown candle and reclaiming candle, ideally the reclaiming candle's volume is a local high
4. MACD: MACD histogram bottoming out, as indicated by the histogram becoming less negative (color changing from red to pink)
SHORT TRADE SETUP : FALSE BREAKOUT
To open a short position, In this scenario, we are waiting for price to break above the horizontal resistance @ $670 and then breakdown.
Trade Entry Confirmation:
1. Price Action: Price breaks above the high of $670 and then rapidly falls below $670, forming a bull trap
2. Candlestick Pattern: A breakout candlestick (candle close above $670) followed by a breakdown candlestick (candle close below $670)
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)
NOTE: There is also an intermediate level, the 61.8 Fib retracement @ $625 which might prove to be a minor resistance where price will struggle, with a possibility that price would be rejected at this level and move down, so its also an important level to keep in mind.
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 moved above the 61.8 fib retracement, and given the bullish momentum in bitcoin, the bias is towards eth continuing to move up and test the highs at 670 as bitcoin has already created a new ATH. Though it is important to keep an eye on bitcoin to see if this is a false breakout and creating a bull trap. Next hour or two will be important.Note
While price has come back down to test the 200MAs, I have not called a trad entry bc: 1. The move up before coming back to test the 200MAs wasn’t big enough to create enough distance between price and the MAs. 2. We actually had a short trade signal on btc. Since btc and eth are highly correlated, we want to see the two move in unison instead of calling a long on one and a short on the other.
Given the lack of sync between btc and eth, and the conflicting trade signals given, might be best to wait for markets to come back into sync and give us a clearer trade signal. Happy holidays and merry Christmas everyone!
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