Ethereum / TetherUSUpdated ETHEREUM (ETHUSDT) DAILY BUY&SELL TRADE SETUPS 2020/12/24
Long Trade Setup: 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: Rejection and Continuation at 200MAs
To open a short position, we are waiting for price to go up to the dynamic resistance zone of the 200MAs and then fall back down. This zone is currently projected to be $600-$610, but could be different by the time that we get to that zone, depending on price action.
Trade Entry Confirmation:
1. Price Action: Price moves into the 200MAs (ideally touching both 200SMA and 200EMA) and gets rejected, confirming that the 200MAs now serve as resistance
2. Candlestick Pattern: A bearish candlestick pattern such as a bearish engulfing candle or a multiple candlestick breakdown (a large green candle followed by multiple red candles that eventually close below the open/low of the large green candle)
3. Volume: Above average volume on the bearish engulfing candle or on any of the multiple red candles that eventually break the green candle (ideally on the candle that breaks)
4. MACD: MACD histogram topping out, as indicated by the histogram becoming less positive (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.
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: Rejection and Continuation at 200MAs
To open a short position, we are waiting for price to go up to the dynamic resistance zone of the 200MAs and then fall back down. This zone is currently projected to be $600-$610, but could be different by the time that we get to that zone, depending on price action.
Trade Entry Confirmation:
1. Price Action: Price moves into the 200MAs (ideally touching both 200SMA and 200EMA) and gets rejected, confirming that the 200MAs now serve as resistance
2. Candlestick Pattern: A bearish candlestick pattern such as a bearish engulfing candle or a multiple candlestick breakdown (a large green candle followed by multiple red candles that eventually close below the open/low of the large green candle)
3. Volume: Above average volume on the bearish engulfing candle or on any of the multiple red candles that eventually break the green candle (ideally on the candle that breaks)
4. MACD: MACD histogram topping out, as indicated by the histogram becoming less positive (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
As I posted a few minutes ago, aggressive traders can consider opening up a short position. We have a short entry signal, but like the last signal we had, this wasn’t a “perfect” setup, so it’s rated as high risk. Let me go over the entry confirmations one by one:
1. Price action: we did see price come up to test the 200MAs and get rejected. The only thing I don’t like about this is that price only touched the 200EMA, whereas ideally we want to see price test and get rejected by both the EMA and the SMA
2. Candlestick Pattern: here we have a MCB (multiple candle break). It took 4 candles to break and close below the green candle. What I like is that we closed below not only the open but also the low of the green candle and we had a volume spike on the breakdown candle. What I don’t like is that the green candle didn’t set the local high, rather it was the candle after that set the local high.
3. Volume: we had a volume spike on the breakdown candle which is good
4. MACD: we saw macd peak and decline, indicating a change in momentum downwards, which is good
In summary, while we have all four confirmations, the price action and candlestick confirmations weren’t ideal.
One thing to keep in mind is that since we are typically aiming for 2:1 or even more RRR, we only need a win ratio of 33% to breakeven. But this means that you need to always practice proper position sizing and risk management, especially for a trade that isn’t “perfect”. So that even if this specific trade ends up being a loss, over the long term, you’ll likely come out ahead. Make sure you are comfortable with these kinds of win/loss and RRR conditions before entering a trade.
Entry was around 590
SL around high of around 600
Target 2:1 RRR, though feel free to take partial profit, move SL to breakeven, etc based on your trading style.
Note
Trade closed in loss. Not all trades work out, especially for high risk trades such as this one. What matters is profitability over the long term (win ratio*RRR-loss ratio*1/win ratio). For example, the previous trade gave us a 6:1 RRR win, so if you took both trades, you would be in a lot of profit with one win and one loss.
We will move onto the next trade.
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Youtube Video Analysis: youtube.com/channel/UCPwR8Rv2YVI7qZIhedX7pQw
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Telegram Community: t.me/joinchat/RbV9ZyWrlQiKOhCw
Youtube Video Analysis: youtube.com/channel/UCPwR8Rv2YVI7qZIhedX7pQw
Youtube Video Analysis: youtube.com/channel/UCPwR8Rv2YVI7qZIhedX7pQw
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.