HIGHER HIGHS - HIGHER LOWS - WHAT'S NEXTNo sign yet this trend is over.
Possible ABC pull back developing
Then Bullish trend continuation
Or bigger bearish reversal
Then Bullish Continuation
Bullishmomentum
ETHUSD: Consolidation Breakout And New Levels To Buy.ETHUSD update: New highs made as price touches 890 which should not be too surprising since there is a double bottom and higher low formation off the 647 area. This report will highlight what is reasonable to expect from here.
The 814 level is a previously projected target where price basically peaked at the height of the BTC rally. Since then, it has retraced and consolidated, JUST LIKE BTC is doing at the moment. Consolidations are just another word for triangles and triangles are trend continuation patterns. The trend was never bearish. Price is now fluctuating in this area again which offers an opportunity to lock in some profit for swing trade longs. This is a best practice. It reduces risk and allows you to capitalize on the herd while they are buying.
Buying now would be a bad idea even though it may look attractive since the "verticalness" is returning. The risk of retrace increases, and that is why it is better to lock some profit it and then hold on to some to see IF the market will continue higher to the next extension target levels.
944 is the upper boundary of the reversal zone where price can fail and retrace back to a newly relevant support level. 975 is the 1.618 extension projected from the 647 low which overlaps a previous extension measured weeks earlier. This is the range where price is more likely to put in a dramatic peak as the market unfolds and provides a reasonable estimate of where to measure reward potential from.
As far as the potential retrace, the 735 level is the .382 of the recent bullish structure which is now the nearest relevant support. If price decides to break lower, the 639 to 574 area would be the range to watch since it is the .618 area of the recent bullish structure.
If price cannot maintain the current breakout momentum, it will more than likely retest the middle of the range which makes the 735 area more attractive in terms of looking for a reversal structure to go long. I have previously written that the middle of ranges are where price action is more random, but IF price is coming off of a high, that is a different scenario and serves as an exception.
In summary, the breakout to 890 is a heads up that this market may be setting up for a broader rally. As a swing trader, I want to be long, but not at highs. The next retrace will at least provide a better level to measure risk from, whether it is 735 or higher. The objective is now to wait for price action to unfold in a reversal pattern where risk is more attractive relative to the potential reward levels currently in place. If price falls through 735 without finding support, then the current move will be a false breakout and at that point is more likely to retest the low of the range since this is where the herd panics. Either way If I am going to buy, it has to be based on my plan which minimizes the kind of bad habits that have been reinforced in this recently unrealistic trading environment.
Comments and questions welcome.
BTCUSD: Momentum Reversal In Play.BTCUSD update: Within the triple bottom formation that is now established in this market, there is a particular sequence of price action that often leads to a momentum reversal. The confirmation of this infrequent pattern is a retest and higher low of the 12350 support area.
Price has broken the 13500 resistance level and if it continues at this rate, will most likely close above. My limit order that I placed yesterday at 13150 (Coinbase) was filled quickly and is now in my favor (this is a long term trade as explained in my previous report. No stops, no targets, no margin). Even though price action is slightly bullish at the moment, it is still not out of the clear.
Is this the beginning of the next leg up? The 13520 level is the .382 of the recent bearish structure. Often, when this level is taken out, it signals a change in momentum which in this case is bullish. The confirmation comes in the form of a higher low formation which would be most attractive around the 12483 to 12139 minor support zone which is the .618 area relevant to this current bullish swing.
If price chooses to retest the minor support, this would be an attractive area to add to long term positions, or initiate new ones. Since this level would also confirm a short term pattern reversal, it will serve as an attractive area for a swing trade long as well. Risk can be defined by 11600 low, or the low of the current structure at the time of the retest.
What about lower prices? Like I always write: anything is possible because things change fast in these markets. IF for whatever reason, price falls through 12139 and retests 11600, it would then be much more likely to revisit the 10700 or lower. IF the market decides to retest these levels, 9683 would not be unreasonable since it is the lower boundary of the reversal zone (projection measured from 10700 low).
What makes that bearish scenario less likely is the price action that is occurring now. The next retrace, whether it is shallow (way above 12483) or into the minor support will provide a much clearer view of what the market's intentions are. What is unfolding now is certainly bullish, but that does not mean the market will return to the vertical exaggeration that we saw 2 weeks ago. A change in momentum along with supportive structure can take this market back up to the 16350 to 17876 resistance area which is the short term target for any swing trades established near or below current levels.
In summary, there are NOW signs in place that short term price momentum is shifting back to bullish. As you can see, it took a couple of days, not hours or minutes. This is what carries weight on a short term trading basis and why so much patience is required. The next retrace will more than likely offer entry opportunities that will have clearly defined risk. IF the price action makes sense I will not only add to my position trade, but also put on a swing trade with a short term target. The key is to watch for reversal patterns near or within the minor support zone. Taking a position sooner is up to your trading plan and risk tolerance, because it is still possible for price to attempt a retest of the lows, just a lower probability at this point. Either way stay flexible and listen to the market, not your own feelings or opinions.
Comments and questions welcome.
Also I would like to wish the Tradingview community a Happy, Healthy and Prosperous New Year! Thank you all for your support and encouragement. Let's learn from our mistakes and hit the ground running, and start the new year strong.
BTCUSD: Key Resistance Zone Near. Watch Supports For Higher Low.BTCUSD Update: The market recovery continues as price nears a key resistance zone. This is an area to consider locking in some profits, not establishing new longs.
The higher low formation that materialized in the 11600 area has lead to a new bullish swing that has quickly worked its way near the 16350 to 17876 resistance zone which is the current .618 resistance area relative to the recent bearish structure. On top of that, price is currently sitting on the upper boundary of a minor reversal zone that is projected from the 11600 low. Even though there are no bearish reversal signs at the moment, this is an area where selling is more likely to appear.
On the more bullish side, price has taken out the 14250 resistance level decisively which signals that the previous bearish momentum is much less likely to lead to a retest of the 11K lows. If price decides to retrace from the current area, it is more likely to find support around 14300 level (.382 of recent bullish swing) or the 13270 to 12500 area which is relative to the .618 of the recent bullish swing. Any retest and reversal off of these support areas are where reward/risk are most attractive compared to where price is now in terms of my swing trade strategy.
Measuring risk in this market is very dependent on what you can afford since the small movements are hundreds of points. If you are going to use a stop, it has to be wide, and that is why under these market conditions, I think it makes more sense to start with smaller positions and build them as the market moves favorably and taking profits along the way at the predetermined levels IF your outlook is short term. All of this must be figured out BEFORE you take a trade.
Being flexible and open for anything means you are open to listening to the market, not fighting it. For whatever reason, IF price breaks below the 12500 level again, that would open the door for a retest of the 10K lows and offer more attractive investment opportunities. Navigating these markets is not about "predicting", it is about adjusting and interpreting new information as it becomes available while comparing it to a predetermined scenario(s) originating from information available at the present time.
In summary, timing short term trades in these markets may seem less effective when prices are moving in vertical lines. The thing to remember is "vertical moves" are far from the norm and low probability. That means the people who start out in the green simply because they bought into this market blindly will have to face sharp corrections just as randomly while the informed trader is prepared to capitalize on such extreme scenarios. The same impulsiveness and impatience that drives the inexperienced investor are the same forces that build opportunities for those who know how to wait, even in the face of markets that look like they are going up forever. Stop giving into the impulse of greed, and learn to wait for the market to come to you. People who were buying at 18K, expecting 30K had to watch a retest of 10K instead. That cycle is nothing new and will repeat itself again and again while varying in magnitude. Learn to wait, or at least manage risk in ways that allow you to capitalize on extreme moves rather than be hurt by them.
Comments and questions welcome.
ETHUSD:Resistance Offers Profit Target But Consolidation Likely.ETHUSD update: A higher low unfolds off of the upper boundary of the 573 support zone leading to a new swing high within the 712 to 772 resistance zone. If price retraces from here, the market is signaling a consolidation, not higher prices.
First, if you managed to buy into the higher low area, the current resistance 712 to 772 is the .618 area relative to the initial bearish swing, and is also an area to lock in some short term profits if that was your original intention. If you are struggling with the idea that price may go to 815 again and feel that taking some profit here will result in a "loss" if price goes higher, then short term trading is not for you. These resistance zones are not guaranteed to lead to a price decline, but they do offer a good estimate of where to maximize a profit based on the risk taken at the time the trade was initiated.
You don't have to lock it all in, but half is not a bad idea. It reduces risk, and still allows you to participate if the market does continue higher. If the market falls apart instead, you at least capitalized on the move and can look to add to your position on the retrace. That is how a swing trade evolves into a position trade, and works well as long as the market cooperates (in this case, stays in a long term bullish trend).
If this market does enter into a consolidation, there will be plenty of opportunities to capitalize on just on the long side alone. The next level I am watching is the 625 to 596 zone which is the .618 area relative to the current bullish swing. IF price can retest this area, I will be looking for bullish reversal patterns.
The other area to be prepared for is the reversal zone which has a lower boundary of 513. Any reversal price action within 573 to 500 (.618 support relative to the broader bullish structure) is an attractive area to buy for swing trades and long term positions in my opinion. Price can go lower, but there are some relevant support structures along the way that make for a strong bullish argument (like the 480 old resistance area now a new support).
In summary, when price action gets noisy, the best areas to evaluate are the range extremes which take some time to define. The worst place to evaluate is the middle because that is where randomness is high. Straight up markets like we have seen in the previous 8 weeks are easy for the inexperienced because they do not understand what happens when the environment changes. The same impulsive emotions of greed and fear will motivate these participants to give back their profits through "gut feel" trading, "because it worked so well a week ago!". This is the nature of the herd and drives prices more than anything else on the short term. We are all wired this way, but that does not mean we have to be controlled by the herd mentality. Having a process to guide your decisions is what will separate you. The process won't be the same for everyone, but having one is key. This process is your trading plan.
Comments and questions welcome.
PS. Happy holidays to the Tradingview community and your families.
LTCUSD: The More Attractive Level To Buy.LTCUSD update: Retracing from 370 high, price is beginning to hold. Is this a good place to buy for the next leg up? And how high can it go?
From the short term trading perspective, buying the pullback in a strong market is the more effective behavior compared to buying into highs. The tough part is when do you buy into the pullback? And how do you know it won't pull back further? This is where the projected levels come into play.
Projected levels on larger time frames carry more weight and are more reliable than the levels measured on smaller time frames. That is why I am watching the 258 support (.382 of bullish structure measured from 84 low). If I am going to buy for a swing trade, I prefer to start looking for reversals that I can measure risk from (like a double bottom on a smaller time frame) in this area because a retest and reversal still keeps the broader trend intact while offering attractive reward potential based on the information available at the moment.
It is not unreasonable to expect a retest of the 370 high if the market can stabilize within a higher low area. The key to trading this effectively is waiting for the retest and confirmation which the market may NOT offer at all. You may wonder, "Then why wait for 260? Just buy it once it starts going up from any support and as long as the reward potential is greater than your risk, its okay? Otherwise you miss all the huge gains!". Adjusting to a level that the market decides to stabilize around other than the projected support is fine, BUT you need to realize when the noise comes back into these markets, you will be giving back the the "GAINS!" that you acquired by getting sucked in to many false starts. This is about forming habits that lead to consistency, not "you only made 100% when you could have made 500%!", that same mentality will set you up to donate your account back to the market once this environment returns to reality. A consistent profit is more valuable to me than a big profit.
If this market breaks the 370 high (which is also the upper boundary of the reversal zone), the next push can take this market to the 424 area which is a 1.0 extension projected from the 241 low. These extensions serve as good estimates of short term profit potential and are essential to evaluating if a trade is worth taking when compared to the risk.
In summary, the purpose for developing a plan of action around levels that are relevant to market structure is to simplify your decision making process and filter out all the false starts and forced trades that lead to a large collection of small losses. The smaller the time frame you trade, the more important it is to have such a process. The inexperienced traders are focused on the amount of profit, but do not realize that same mentality is what leads to over trading. Current market conditions reward such a mentality, but what happens when the environment changes? It always changes. Even as these markets work their way higher in the long run, it does not mean it will be a smooth and bump free ride. Develop the habits that will facilitate base hits, not home runs.
Comments and questions welcome.
Nasdaq Interview: So for those that missed it, my interview appeared in the Nasdaq Twitter feed yesterday. You have to scroll back and look for it (around 11 AM EST). Https://twitter.com/nasdaq
ETHUSD: 1K Near But Watch For These Reversal Patterns.ETHUSD update: New all time highs made at 863 with no bearish activity in sight. At this rate, this market can reach 1k in a matter of a day or two as money rotates out of BTC again. That is not a very difficult forecast to present, anyone that has been watching these coins for a month can do that. In this report I am going to highlight the signs to watch for IF this market decides to retrace sooner than expected.
There is actually one bearish sign that is invisible on these charts and that is the 5 wave structure that is now in place (originating from the previous consolidation at the 425 area). I am not including the wave counts on this chart to avoid clutter, BUT when 5 impulse waves are in place, what often follows is a corrective move. This doesn't mean it WILL happen, because 5th waves can extend dramatically as we have seen in these relentlessly strong markets, which is something to be aware of especially since price is now hesitating around the 814 target which is an extension measured from the weekly time frame (I wrote about this in a previous report).
The key to timing a bearish reversal is waiting for a structure such as a lower high, a failed high or double top on a large time frame. This can take hours or days to unfold and often begins with a reversal candle such as a engulfing formation or pin bar. As long as these formations are not appearing, this market is more likely to continue higher.
Since I never had intentions to short this market, the best I can do is wait for a relevant support level to measure risk from for a swing trade long. If you are an investor, then this short term analysis is of little value and must keep the two mindsets separate. The level I am waiting for is the 684 area which is the .382 of the current bullish structure which can offer an attractive long IF the market retests and validates. If the market happens to break lower (it can happen), the 573 to 500 zone is the next area to watch which is the .618 of the current bullish structure. These are the prices that offer attractive reward/risk for a short term swing trade.
Since these markets are extremely reluctant to pull back (maybe after the holidays), it is now within reason to see price reach for the 1K level which is an important psychological resistance (just like 20K for BTC). There is a 1.0 extension at 972 and is projected from the 610 low. This offers an estimate of where price can experience resistance and possibly reverse especially since it is so close to the 1K level.
In summary, when it comes to short term trading, it is less about fundamentals and more about evaluating changes in price action. Not knowing how to separate these mindsets seems to be a serious problem that will give the skilled traders the advantage over the lottery ticket holders who have no plan, no process or way to evaluate market information that facilitates effective decision making. Vertical markets attract these participants in droves and once these markets cool off (note: all markets do) there will be plenty of opportunity for short term traders that have a well defined decision making process (also known as a plan). A plan does not have to be complex, but it should be based on scenarios that are derived from fundamental or technical measures at least. What many do not realize is the market is momentarily rewarding gambling. Buy at any price and win big, and will continue until something comes out of nowhere and pulls the rug out. Be prepared, take some money off the table when you can, and appreciate what the market offers as a gift that can be taken away at any moment.
Comments and questions welcome.
Today at around 11:30 AM E.S.T. I will be appearing on NASDAQ with Jill Malandrino live. Check it out here: Https://twitter.com/Nasdaq
BTCUSD: Futures Coming. Forget Opinions, Watch For Reversals.BTCUSD update: 12761 low reached and retrace in progress. In this analysis I am going to further explain what levels to watch for and what kind of behavior to anticipate. Once the futures open, let go of your opinions and be ready for anything.
The 12670 area is the .382 support measured from the 5400 low. Why 5400? Because it is the bottom of a very large swing. I wrote about this level in my previous report. At the moment, this market is showing a minor corrective structure with a lower high established at 16,300. Lower highs often lead to lower lows. The question now is will the current bullish effort break this bearish three leg formation and head for new highs?
The 14430 minor resistance has been cleared which is a sign of momentum change back to bullish, but this is not a buy signal.
The structure to wait for after this break is a retrace that either 1. forms and higher low around the 13719 to 13315 area (.618 of current bullish swing) or 2. forms a double bottom off the 12700 area. Also it is very possible that this market can go slightly lower, into the reversal zone which has a lower boundary of 11600. This is a higher probability area where price can reverse back up quickly. The key is WAITING for these formations, not assuming they will unfold. Even though there are limitless combinations and scenarios that can happen, by narrowing your decision making to a limited number of scenarios that offer higher probability is the basic foundation of a trading plan.
IF price falls below 11600, then momentum can take this market back into the next relevant support zone which is the 9891 to 7923 area (.618 of bullish structure from 5400 low). That would be the next area to look for stability before taking any new swing trades on the long side.
As far as shorts go, the levels to watch for are the 15480 to 16240 zone which is the .618 resistance of the recent corrective structure. Waiting for reversal structures here is very important because since this market is generally bullish, this resistance is more likely to break. Beyond this area I would be looking for a double top or a slightly higher high followed by a reversal candle. Shorting this market offers opportunity only if you are nimble, and know how to take profits early. I say this over and over, if you are trading without a specific plan, especially for shorting, you are asking for trouble.
Once the futures open, I do not think the reaction will be immediate. There may be an initial surge, but the volume probably won't be significant until tomorrow during regular U.S. business hours.
In summary, if I am going to buy into this market, it has to be near the supports evaluated in this report, and there has to be a supportive formation where the risk can be clearly defined. And until the futures take hold, I would rather stay out and let the market tell me what is more likely to happen. Like I said before, our opinions mean nothing in the eyes of the market. As a short term trader, our focus is momentum and what is happening now compared to what just happened, in order to get a glimpse of what can happen next and then measuring risk. If you insist on buying into this market, at least wait for a higher low, or retest of the the relevant support followed by a reversal formation, because those are the areas where reward/risk is not only better defined, but also the most attractive. As this market enters reality, there will be plenty of opportunities both long and short, but as more competition enters, more skill will be required for success over the long run.
Comments and questions welcome.
ETHUSD Higher Low And Long Entry.ETHUSD update: I am LONG from 420.27 with a STOP at 396.45 and TARGET at 453. Reward/risk: 1.4/1. The entry criteria has been met for a swing trade long. (Trade was posted as an update in my previous report). I will explain the thought process further.
As I wrote in my previous summary, buying into a pullback within a broader bullish trend is in line with my swing trade plan, BUT there has to be some form of confirmation. That confirmation has appeared,and as a trader, I have done my part: followed my plan, now the rest is up to the market.
As far as levels go, the 422 to 400 area is the .618 support zone of the recent bullish swing. That was the first point of interest, but not enough for an entry. I wrote about the 391 level and how I wanted to see a reversal formation between there and 361. 391 held and the higher low formation has appeared around the 400 level along with a newly established broader double bottom formation off of 391. A higher low on a smaller time frame off of a larger double bottom in a generally strong market is in line with my plan. Even if this trade stops out, I waited for everything to line up in my favor. Having these definitions and letting the market prove itself is better than buying too early and not knowing if this market is going to hold or collapse. At least I have structural evidence that suggests the bearish scenario is now much less likely.
Why 453 target and not 500? (Or some other ridiculous number like 1k?) IF the market offers the opportunity to sell at 453 quickly. I will exit half the my position, and trail my stop manually from there. I try to lock in some profit and reduce risk as soon as soon as my plan calls for it. I chose 453 because it is just below the 455 old support/new resistance level and in the middle of a .618 resistance area of the recent bearish swing. Since this market is generally bullish, there is a better chance that price breaks above that zone and retests the 500 high, so I intend to hold some for that possibility.
I don't know if my trade will work out, all I know is that the factors for the outcome that I am looking for are now in line. That is the purpose of a trading plan. I don't have to think, or worry, everything is defined ahead of time, from the entry, to the management to the exit. The hardest part is WAITING, as many people do not have the patience, especially when markets like BTC go to 17k in a matter of a couple of days.
I suspected this market retraced because of the BTC spectacle but that is just a hunch. If this market has retraced because of congestion over some cat game on the blockchain then that is not really a good sign in my opinion. How is it going to handle serious applications where there is a lot more at stake? As a short term trader, I really don't care why, because I am not trading on that information. I used to trade stocks of companies that produced nothing. It is price momentum that I am interested in and that's it.
In summary, I am simply following my plan and that is the best I can do. Now I just have to manage the trade as the market unfolds. Things change fast and that is why a well defined plan is so important because it enforces rules and minimizes emotions. Many new traders are soon going to learn the realities of trading. BTC is lala land, no skill is required to buy and hold. When that market returns to reality that is where the skilled traders will step in and capitalize on all the bad habits and euphoria that is running rampant in that market. A 5K move in 5 days without a retrace is a breeding ground for unrealistic expectations. Learn to structure your decision making process, and no matter what conditions you face, you will at least align yourself with the probabilities while at the same time knowing how to constantly adjust for risk. As much as people criticize TA, it at least provides the tools to build a framework for consistency.
Comments and questions welcome.
BTCUSD Perspective And Levels: Up, Up And 12.5K. Going Higher?BTCUSD update: 12K reached as this market is pushing highs as I write. The reversal zone boundary at the 12100 area has also been compromised which is a sign that strength is likely to persist for now.
Sure this is historical and will continue to attract more and more attention, which feeds these markets even more (positive feedback loop: google it). The only thing I can do as this market offers little opportunity for me right now is continue to measure and evaluate supports while observing price action. Little opportunity? It's going straight up!
As I have explained many times, I do not buy highs. I follow my plan, not my fear because opportunity is an unlimited resource. I am curious to see how the futures affect the price action in a few days and would actually prefer to trade the futures instead because of the security and flexibility that the new contracts will offer, especially for shorter time frame strategies which is my specialty.
In terms of levels at the moment, price is sitting on the 1.618 extension projected from the 8821 low. The next reasonable target is the 13237 level (1.0 projected from 8821) and then the 14700 which is the 1.618 extension projected from 8821 as well. The nearest support is the 11050 level which is the .382 of the recent bullish swing at the moment. As price continues higher, this level will continue to adjust higher as well.
These levels serve as points of reference to keep expectations somewhat in line and offer short term targets. IF price breaks below the 11050 level, I will be anticipating further selling because the level is so shallow relative to the recent structure. Until something like that happens, there are NO reasons to sell or get short at the moment. It's funny because I read an article from a well known financial publication that actually mentioned the built in inconvenience to short these markets that the futures will address.
In summary, times like this can easily get the best of your emotions and blind you to the amount of risk that is present at the moment. I believe the futures will bring more balance to this market, not drive it to 30K anytime soon. I do not fight markets, I just read the signs and adjust to what the market presents and will participate as long as it is within the boundaries of MY plan. If the market is not in line with my plan, it doesn't matter how high or low it goes, I will avoid it all together. Most importantly if you had the courage to get in recently, just make sure you have a well defined plan that will guide your decisions when this market turns because when it happens, it will be fast. Depending on others opinions to base your decisions on is a really bad idea. The type of market that we are in at the moment is rare, and can persist long enough to make the world believe that "it's different this time". This is why I day trade (other markets) because it doesn't matter what the market does, you simply adjust and trade.
Comments and questions welcome. (Thank you everyone for the feedback from my previous report. It was very helpful).
BTCUSD Perspective And Levels: 12K And The Future(s)?BTCUSD update: Sitting on the high, this market is still poised to go higher. There are two extensions to be aware of: 12400 and 14750.
The CBOE is aggressive and will have the futures trading in a matter of days followed by the CME shortly after. No one knows how they will affect this market, or the alts, we have no choice but to wait and see.
Meanwhile this market does not really retrace. It almost seems too easy: "just buy and you will make money", "it's different this time", etc. I don't like to be the one to burst people's "bubble" but it is not different this time. The Dot.com era offered the same promise, and it delivered on it's promise, the internet has dramatically shaped the future and has presented limitless opportunities, but the equity markets experienced two serious corrections since then and the majority of internet stocks that existed 20 years ago no longer exist.
I do not know when this market will experience that magnitude of correction. The scope of my analysis covers short term price action, and there is still no sign of weakness. There are two levels just above where price can potentially reverse, but that is no reason to get short. There is 12100 which is the upper boundary of the reversal zone measured from the 8821 low. There is the 12400 extension which is measured from the 5400 low and then there is the 14700 (1.618 extension) projected from the 8821 low.
14700? Proportionally that is a potential target for this market (doesn't mean it will get there right away). As far as support goes, 10700 is the active support for this market (.382 of recent bullish swing). At this point, unless you are trading small time frames, I am using a break of this level as a signal for coming weakness. The break would have to be significant (price will have to be trading back toward 10102). A break by 100 or 200 points is not very meaningful in this market. And for those itching to short, the best time to start looking for setups is the retrace AFTER that break (and I would also wait until the futures are trading since this market is severely skewed by the inability to short and Tether).
Until then, momentum and structure are aligned for higher prices. Now, I keep getting messages asking if this is a good time to invest. In my opinion, no. Short term trading is one thing, risk is defined by near by levels and the position can be exited for relatively smaller losses. Investing implies holding which opens you to a ton of risk and uncertainty. Why buy highs? ALL markets correct, why not wait? It is amazing how blind greed proliferates.
In summary, the kind of price action that is occurring in this market is very unusual. And for me is a red flag. There are a number of factors that can come together and change things quickly: the futures which will open this market to institutions and a more balanced ability to short, and the Tether situation. I do not mind buying into a strong market, even with these potential threats, but IF I am going to take a swing trade long, I prefer to do so on my terms which means it has to be according to my plan. If the market will not meet my criteria, then I stay flat. I developed this plan to keep me out of trouble and to help me recognize when conditions are more favorable in terms of reward/risk. It is not meant to get me into every movement, instead it is a form of protection against impulse, opinion and emotion.
Comments and questions welcome. (Also quick note: It has been brought to my attention that my reports are not appearing where they should be and as a result, my viewership is seriously low. TV does not seem to be responsive to the situation,so I am wondering if I can get further feedback from the community. I am trying to figure out, is it my subject matter? Feedback would be much appreciated).
BTCUSD Perspective And Levels: 12K Around The Corner?BTCUSD update: This market is poised to push 12k after consolidating for about a half day, as the bullish momentum continues. Price is still within a potential reversal zone, but NOT enough of a reason to short.
In my previous report, I wrote about the built in long bias coupled with the freedom from institutions. No one knows what is going to happen when the futures start trading, even the experts who set up new futures contracts have no idea. The sentiment of the crowd appears to view institutional involvement as a whole new wave of large buyers that will drive the market dramatically higher, but do not realize institutions trade in more complex ways. I believe this new level of complexity will facilitate a more balanced market which is not the most beneficial for short term retail traders.
Before I get into the TA, think about this for a moment: A fund manager has a responsibility to his investors and wants to show a positive return, BUT that is not the only way fund managers get paid. They also charge management fees which are not performance based, but instead are incentivized by how much capital is under management. Wealthy investors invest more into instruments that are stable, and that show a consistent return over time. They invest less in wildly fluctuating markets like this. Futures and options can be used to create more stable performance which will attract more capital, which results in higher management fees. My point is this: This market will become a thick slow grind market, similar to the S&P 500 or EURUSD. It will offer opportunity as always, it just won't be as generous and easy as it is now.
As of now, price is sitting in the middle of the reversal zone and still no signs of weakness which means both long and shorts are high risk at these levels. In terms of risk/reward, shorts would make more sense, BUT with no signal and no confirmation, there is no evidence based reason to be short. What to look for is reversal candles or patterns around or just under the 12k level, or a break below 10722 which is the .382 of the recent bullish swing.
Until a bearish pattern appears, and until supports break, this market can continue higher. How high? If it breaks beyond the 12100, the next target extension is 12400 which is measured from the 7871 low. This is based on the structure that is in place at the moment.
In summary, as short term traders, the BEST we can do is embrace what the market is telling us, whether we personally agree with it or not. I believe this market is in a bubble and will correct harshly once the fake tether situation unwinds, but that is an opinion that the market could care less about. I do not act on my opinions, I act on technical facts. Sure I want to be long as it goes higher, but I am not willing to take the risk at these levels. Even retraces are tough because they are so shallow relative to how far a fast this market has come along. So when I face so much conflict, I stay flat until the market presents an opportunity that is in line with my trading plan. It is my plan that keeps me out of trouble, and minimizes any impulse stimulated by these fast moving prices. When you are in this business for a long time, you learn that capital preservation is actually more important than capital gain. This is why I seek consistency rather than lottery tickets. If you cannot trade with any consistency, in time the profit you have now will be donated back to the market.
Comments and questions welcome.
ETHUSD Perspective And Levels: Triangle Before The 500 Run?ETHUSD update: As BTC makes history breaking 10K, this market is consolidating, it is just a matter of time before this makes the run for 500 based on the current price structure. So I am now long at 468.72. Stop 454. Target 499. RR: 2 to 1 (50% position size).
These markets are great because they do not seriously correct anymore ( hehe, YET). When they do, it is most likely going to be extreme, and many will jump in too early and get caught. I do not plan to be part of that mess.
Until that happens, we can either play close to the vest and be quick to get out if the market happens to turn and be prepared for a small loss, or just avoid these markets completely. Investing for the long term at these levels is a very risky proposition.
With that being said, it appears that there is not much of a relationship between these markets except for which ones investors pile into next. They take turns. And the whole idea of short term trading is to capitalize on these movements while keeping risk under control.
While BTC is in the spot light, this market has been ranging between 446 and 491. The mid 450s have also been a supportive area as well. Consolidations like this are trend continuation patterns and there is no question the trend is bullish. Some may wonder, isn't this going long near the top? No. This is a consolidation that is within a clear bullish trend, and offers clear reward/risk. If the entire market falls apart while I am long, well, that is the risk that I take, but that is why I have a stop at 454.
This trade is aggressive in the sense that this market is not at a projected support, but there is a triple bottom reversal formation on a 1 hour chart off the 458 level. The trade set up isn't perfect, but the context is clear, so I adjust by taking a smaller position. I am not changing my plan, I am just being more flexible and believe the environment is supportive enough for the moment. I also believe that 14 points of risk, defined by a clear structure is reasonable for these conditions and within the rules of MY plan. I will do my best to update this position as it unfolds, BUT keep in mind I do not watch these markets tick by tick.
In summary, there is no precision in trading. It is a matter of having a plan and a set of guidelines that govern every decision while allowing for some flexibility. In taking a long at 468.72, I am buying in the middle of a range that is within a clear bullish context. To adjust for this aggressive play, I am entering with a smaller position (50% of usual size). I can always add the other half on a break out attempt. Consolidations such as this are continuation patterns, and I believe will follow through until the entire coin space corrects, and it will. BTC over 10K, ETC over 30? And some of the less popular coins all pushing steep new highs is a sign of a bubble in my book. It's okay to participate as long as you understand WHERE your risks are, and what to do when the carpet gets pulled. I am willing to take a chance on this market, within the conditions relevant to this the current environment. It is a short term play, anticipating an attempt to the psychological 500 level.
Comments and questions welcome.
BTCUSD Perspective And Levels: 9959 And Trailing Stop.BTCUSD update: 9895 new high and poised for 10K. The music hasn't stopped yet, so if you are in, the best you can do is manage and be aware of any early selling signs. If you are out, now is not the time to get in.
I do not want to sound repetitive, but this price action is very suspect. Runaway markets like this are rare, and unusual and will encourage bad habits among the inexperienced. What you are seeing in all of these markets is very bubble like and best for taking profits in my opinion. I have seen this before and it is just a matter of a surprise. Some "unexpected" news.
If you want to hold because that is what has been working, then by all means hold, but you would be foolish not to lock in at least 25% at these levels. A few years ago, silver went from around 15 to 50 in a very short period of time. There was all this talk about a huge silver shortage and how one major bank was stuck in a large short position. The metals are relatively small markets, are limited resources like the coins, and they have to be mined. I figured silver would be at 100 at the rate it was moving. Know where it is today? 17.
There may be different drivers and catalysts for the coins, but markets that go too far too fast play out the same. (Google Tulip Bulb Mania).
I measured an extension from the 5114 low and projected from the 5400 low, and it revealed a 1.618 at 9959. This is a target and psychological resistance. I am not going to generate new support levels until this market decides to show signs of weakness.
One level that I will be keeping an eye on is the 9450 level. Why 9450? It is the low of an inside bar on this 12 hour chart. A break below that, and that will be the first sign that momentum MAY be changing in this market. From there I will evaluate the relevant support levels. That is my only plan for this market at this point.
One thing to consider if you do not know whether to hold or sell is use a manual trailing stop. Since this market is not really retracing, use the previous day's low as a reference point. Each day, as the market fails to retrace, you raise the stop to the higher low. Eventually, you will get stopped out, but the market will decide instead of you. This often allows for staying in a move longer because you take yourself out of the equation. The thing is IF the market gets noisy, it is possible to get stopped out and then watch the market go higher without you, but if you are walking away with a profit, there should be no complaints. This works well in trending markets that do not retrace (like what we are seeing now).
In summary, ride it out until the music stops but do not be afraid to take profit. There seems to be this "entitlement bias" that is running rampant among newer investors. They believe they are entitled to sell the top and if they sell and take a profit, and the market runs up another 1k points, they get upset. That is greed and it is the same motivator that will seduce you into buying too early when this market decides to really sell. As far as swing trades go, I have no interest in taking any risk at all at these levels. I don't buy highs of asset bubbles. My plan at the moment is to wait for the next major support which is in the low 8ks and EVALUATE from there.
Comments and questions welcome.
BTCUSD Perspective And Levels: 10K Will Be Psychological?BTCUSD update: 9771 all time high reached and then retrace. Went higher than my 9600 target by 171 points (which is small relative to BTC) and is now showing some signs of minor selling. Will this market really correct this time? Or is it going straight to 10K?
If there is going to be a corrective move of more significance, the low of the just closed candle will have to be taken out which is 9231. IF that happens, the first support I will be watching is the 9040 area which is the .382 support measured from the 7870 low.
If that first support is taken out, the next level is the 8450 area which is the old resistance, and now a potential support upon any retest. Also the .382 of this entire swing measured from the 5400 low is now the 8100 area. The area between these two levels is where price consolidated before making these dramatic new highs. The combination of these factors would make this area ideal for a bullish reversal and second attempt to retest the high.
Keep in mind IF the 9231 low is not taken out, then this market is not correcting yet. It will likely drift higher. The 10K level will be a psychological resistance and major event for this market. So be prepared.
As far as new targets go, I measured the 1.0 extension from the 5400 low, and it shows 10,687 as the result. IF the market makes it to this level without any retrace, then it will be completing a zig zag formation that has some symmetry. Without getting too complicated, IF the market rejects the level quickly, this market could be on its way to forming the head of a very large head and shoulder formation. That would be a clear sign that a major retracement is coming. At the moment, this is all just a potential scenario based on the likeness of the current structure. Just something to be cognizant of IF the market chooses this scenario.
When I first started trading, I worked in an office with 300 traders. When the market got quiet around lunch time, many of them would pull out chess boards and play chess. I thought it was just to avoid trading slow markets, but there was another reason they chose chess. It helped sharpen their skills of anticipation and flexibility. The same mindset that we need to actively trade financial markets. I am not a chess player BUT it serves as a great example as far as how to structure your thought process when facing trading decisions. In chess, you are running through all the possible moves (scenarios) that your opponent can make, and you ADJUST as the game progresses and anticipate new possibilities as you receive new information (an unexpected move by your opponent). Of course in chess you are trying to outsmart your opponent, in trading there is no outsmarting, only adjusting. The market will always have the upper hand. In order to navigate financial markets consistently you must have a well defined strategy and it begins with a thought process. Start by thinking chess.
In summary, there are still no signs of weakness in this market. If selling is going to happen, the first signal will be the break of large time frame lows like 9231. Otherwise, the strength must be recognized and the possibility of reaching 10k is within reason. If you can't resist getting on board, at least be prepared if the music stops sooner than expected. These are unusual and rare conditions, which are great, but do not let the market fool you into thinking it is always going to be like this. That is when it sets you up to give it all back.
Comments and questions welcome.
BTCUSD Perspective And Levels: 10K? Game Of Musical Chairs.BTCUSD update: Hanging on all time highs of 9400 as I write this. The spot light has switched from ETH back to BTC. Are these markets going up forever? Not in a straight line. This price action is euphoric and is a great place to lock in profit, but not to initiate new positions, even in the face of a 10k possibility. I will explain why.
It appears that the news that is driving this market is somewhat significant, like more governments adapting blockchain, etc, and that is great for the future of this technology in general. The problem is, as many newer traders do not realize, this rate of change is abnormal and unsustainable. The strength is clear and cannot be ignored, but my point is: do not get used to this. Stocks like Yahoo and AOL (when AOL was just AOL) also used to go up 100 points a day, and moved like that for about a year (back in 1999), and today they make headlines if they move 1 point. (I realize BTC is not a stock, but I am just illustrating a point).
I make this point not to elicit more fear of missing out, but instead to provide a perspective to better manage expectations as this market matures and faces many changes like the upcoming futures contract, real institutional competition and regulation. The less experienced do not understand, institutional players have better information, much deeper pockets and can hire the best talent. They are smart money, and they are not entering this market to help the little guy. Be prepared for harder markets, especially on smaller time frames. One other point to keep in mind also is that a large number of U.S. investors are prevented from shorting these markets. Exchange platforms like GDAX (Coinbase) do not allow margin accounts for retail investors in the U.S. (I can't day trade this market short, even if I wanted to.) The futures market will not have such restrictions. That may help explain to some degree the imbalance in these markets as well.
As of now, there are no signs of weakness. Higher highs, especially all time highs often signal further strength. I keep reading comments about people selling all their coins and feeling bad because the market is higher. Selling the top and buying the bottom are like hitting the lottery, low probability. Thinking that you are entitled to selling the top is like thinking you should win the lottery because you bought a ticket. As short term traders the goal is to achieve consistency in a way that is reasonable in terms of the risk we are willing to take. And repeat our process over and over. Not hit home runs.
My next target on this market is the 9600 area. It comes from two 2.618 extensions that are almost overlapping between 9470 and 9575 so I will estimate it slightly higher. These extensions are measured from the 7871 and 6185 lows respectively.
This is a great move if you are in. If you are not, then that's okay too. There is no need to get emotional. Even though I have a higher target projected and no weakness in sight, does not mean it can turn instantly without warning. That is why buying highs, especially in euphoric markets like this presents such a high risk. The market can keep going, but no one knows when it will turn. It is like a game of musical chairs (google it), if you are going to play, you better be quick to sit once the music stops.
In summary, I am not buying highs. And even if I could short, I would not because I do not short strong markets. My plan forces me to wait for a sensible retrace which is elusive, but it will eventually present itself. 8825 is the closest support (.382 measured from the 7871 low). The next support after that is 7885 area which is the .382 measured from the 5400 low and a previous resistance. The best I can do is wait and see if price produces a reversal formation on a smaller time frame at one of these levels for a possible swing trade with risk that is sensible for MY plan. Otherwise I stay flat.
Comments and questions welcome.
ETHUSD Perspective And Levels: One More Leg To 500+?ETHUSD update: 483 all time high touched which is just one point higher than the 482 extension target while this market is now consolidating and attempting to break higher. The next target extension is 516 based on the current structure in place.
Some people (critics) seem to think I am making up these target numbers. Just to be clear, these extension numbers are based on a proportion of the current price structure. There is no guarantee that the price will stop and reverse at these levels, but there is a greater chance. These proportions tend to act as natural inflection points that the market "herd" is more likely to react to. Whether it is self fulfilling prophecy or not, these proportions are very relevant in these highly emotional markets. So for the critics: I am not making them up, the market is.
That is where the new 516 target comes from. It is the 1.618 extension projected from the 395 low. Will this market actually get there in the next day or so? I am skeptical because 500 is a psychological level that can act as a barrier, but anything is possible. Since the 355 breakout, this market has been in the first leg of a large scale Wave 3. These waves are often powerful and to fit the rule, cannot be the shortest wave within the 5 wave sequence. You can see this more clearly on the weekly time frame.
Once this initial leg is complete, Wave 2 should be a relatively larger retrace than this market has been showing since the break out. As long as price stays above the bottom of Wave 1 which is 280, then it will be setting up for a 3 of 3 which can take this market much higher over the next couple of months. The retrace can take a week or so to play out, not a couple of hours or days. The most relevant level is around the 408 area which happens to be the .382 of this entire bullish structure.
Again it is important to be prepared for anything. IF for any reason this market goes below 280, then this wave count will be negated. I realize that almost sounds laughable at this point, I am just saying don't neglect that scenario completely.
As far as WHEN this market will retrace and offer a buying opportunity, there is no way to forecast that. At the moment, there are no signs of weakness. Price consolidates for a half a day and then continues to new highs which is what it is poised to do at the moment. Moves like this are rare and are like lottery tickets, but rates of change this rapid are extreme and not sustainable. Normalcy will return, it always does, in every market.
I will not buy highs. I have been saying that since 371 and here we are 100 points higher. I have seen moves like this before in other markets so I know how they play out. My plan is simple: Watch for a retrace, a reversal and go long at an attractive reward/risk. Based on the new high, I am watching the 450 support (.382 measured from 395), the 433 support (.382 measured from 350) and 408 (.382 measured from 286). The consolidation at the moment is setting up to continue higher rather than to any of these supports, so a break beyond 476 can also offer a day trade opportunity if you are willing to accept the risk. Keep in mind the bottom of the range is 454 which means you are looking at a max of around 20 points of risk to hopefully make 25 or more in a very short period of time. It's possible to figure out a tighter stop, but that is up to you. I am not day trading these markets and NOT willing to take the risk.
In summary, relentlessly strong markets like this are tough to trade because you don't know where it will turn. For the less experienced who do not know, these kind of movements are not common and if you are in that's great. My point is this: do not let your expectations get warped by a low probability condition. If you do, you will most likely have blatant disregard for risk the next time something like this appears to be happening, and you will give your profits back in the much more numerous fake outs.
Comments and questions welcome.
ETHUSD Perspective And Levels: Next Stop 482 Extension?ETHUSD update: All time high made at the 458.96 level (Bitfinex) while the 437 extension was blown through as bullish momentum continues. Based on current market structure, 482 is the next target. And you wonder, when is the best time to buy?
In my previous report I listed levels that I was looking for in order for a possible long. Were any of them reached? The best the market could offer was 400, which was 8 points higher than my closest support which was 392. If YOU were watching closely, there was a double bottom on a 30 minute chart that offered an attractive entry. The second low of that formation occurred at 1 AM EST. I am actually sleeping at that time so I could not update my report in order to let everyone know it was a good time to get in. And this is why I provide perspective and not a signal service.
Since the double bottom occurred at 400, the 392 support could have been used as a good reference point for a stop with 437 as the target. (I wrote about 437 in my previous report). So you had enough information to assess reward/risk along with a formation.
I am writing this to make the less experienced aware that they key to using my analysis is NOT waiting for trade calls, but instead to learn how to think on your own. My analysis provides perspective and levels as the title describes. I keep reading comments about how I don't take any trades. Taking the trades is up to YOU because a trade requires an assessment of risk which is different for everyone.
Please understand as an author, I have a greater responsibility to the community. If I say "buy", a lot of people will buy, and if they lose, I feel partly responsible so my trade calls have to be extremely well selected in order for the risk to be at a level that I feel is low enough for the majority of less experienced traders to take. And after all that, the trade may still not work out, but at least I made every effort to select one that the risk was reasonable in terms of the conditions at the time.
So my message: Do not depend on anyone's trade call, take initiative, assess the risk and take responsibility for your own decisions. If you say, "but I am new, and that is why I am on here, looking for trade calls.", then you will not be successful in the long run if your plan is to blindly follow others.
On to analysis! Based on the current structure, 433 (.382 measured from 392 low) is the nearest support which is very shallow and has a better chance of breaking, but since this market is so strong, it may be a level to consider upon a retest. A more reasonable and likely support is the 417 area which is now the .382 support measured from the 350 low. A retrace into this area, followed by a reversal formation would offer attractive reward/risk since the low 400's can be used as a reference for a stop. And if price retraces further, then the 392 support is the next level I would consider since it is the .382 of the bullish structure measured from the 286 low.
The next target is 482 and is a 2.618 extension projected from the 348 low. Also depending on how far this market retraces, the 461 area can be used as a target as well. With these levels, you have enough information to assemble a swing trade IF the market presents the opportunity (like it had at the 400 level).
In summary, there is probably news out there that is driving this market higher. I do not need to know what it is in order to trade on the short term. The strength is clear, but don't forget, these markets are highly irrational, and often manipulated in ways that are different from traditional markets. There is no reason to be emotional, or feel bad for missing the relentless rally. The great thing about any financial market is opportunity is an unlimited resource because "history repeats itself" (which is a basic tenet of TA). Be flexible, watch for reversals, and most importantly understand your risk. Highs are better to take profit, not initiate positions.
Comments and questions welcome.
ETHUSD Perspective And Levels: How Much Higher?ETHUSD update: All time high of 418 reached and not too far from the 437 extension. Since the break beyond the 355 range resistance, this market has been making significant progress as far as attempting to clear the big picture range. Why 437? I will explain.
In my previous report, I wrote about the 371 target, and what this market had to do in order to reach the 392 level and beyond. The problem is this market refuses to retrace to a more attractive support level for a swing trade long based on MY strategy. Before this new high, I wrote about a retest of the 335 level, but the market chose 350 instead. Keep in mind I cannot monitor these markets and update my reports 24 hours a day (as some people on here seem to expect hehe). I constantly explain the ability to be flexible and nimble is required to navigate these markets, especially on smaller time frames. If you cannot figure out how to spot a higher low on your own, then you should not be trading real money. The purpose behind my analysis is to provide a perspective, or a context to help you make better decisions, NOT to make decisions for you.
As of now, this market is sitting on the highs. What is reasonable to expect from here? MY plan is to wait for a retrace and attempt to buy for a swing trade long. AGAIN, if my levels are not reached, then I can't force a trade. You must decide if the risk makes sense for you and your plan IF the market ONLY offers a shallow retrace like it has been doing since the 330 breakout. I write these reports based on the risk that is appropriate for MY plan, just to be clear (I understand the majority of the community understands this, I just have to write this for the limited few who don't).
Here are the levels I am waiting for: 392 which is the previous peak (old resistance, new support), 384 which is the .382 support measured from the 350 low and IF this market retraces further than that, then I will be watching the 370 to 360 support zone which is the .618 area relevant to the 350 low also. If I can manage to get long, I will be looking for this market to make a run for the 437 target (1.618 extensions measured from the 350 low). These proportions are based on market structure and is why they offer somewhat reliable estimates.
At the rate this market is moving, it may NOT retest the projected supports any time soon. My plan forces me not to buy highs and wait for supports. If it retraces to a more shallow level, and the risk is within your plan, then you have to make the adjustment. I will do my best to report any adjustments to the levels that I see.
One other observation about the current situation is this: I can count 5 waves starting at the 286 low. 5 waves on top of price pushing through a 1.618 extension (406) in a vertical line is often a recipe for a retrace. Just another reason not to buy these highs, and instead lock in some profit if you have been holding from much lower prices. TO BE CLEAR, I am waiting for a retrace that may not happen, I am NOT calling for a major correction. This market is likely in a large scale Wave 3 which is very bullish.
In summary, this market is making significant progress as far as breaking out of the large consolidation it has been gyrating within for weeks. All time highs signal more strength to come, but also present higher risk of retrace. I am waiting for the retrace, because that is what MY plan calls for. I do my best to share observations and levels that are useful, but if you do not have a well defined strategy and process of evaluating risk, then no analysis will help you. If you cannot make decisions and accept responsibility, then you should not trade. Either find a signal service, or pay a trader to trade for you, that is my suggestion.
Comments and questions welcome. (The community has been doing an excellent job of answering many questions for me. I try go through them and answer as many as I can. If you can't wait, then please PM me).
BTCUSD Perspective And Levels: Consolidation Nation.BTCUSD update: This market is consolidating within a 300 point range, still within the reversal zone but the longer it stays at these levels, the greater the chance of another bullish breakout.
What about the head and shoulders on the 4 hour chart? There is a head and shoulders formation that should not be ignored, but you have to consider the bigger picture. Price is consolidating near the highs and more importantly, NOT taking out any lows. Even on these wild 300 to 500 point gyrations, this market is still holding up well considering where it is.
The head and shoulders is meaningful, but IF this market does not decisively break below 8k and paint a closed candle on its lows, then it is likely to break higher. Once again a condition like this is conflicting and confusing, but the overall trend carries more weight and is still in play until the market proves otherwise. Day trading is your best strategy in my opinion to capitalize on the minor weakness, while waiting to see if the market takes out any significant lows.
8K is not only an old resistance/new support but it is also the .382 support measured from the 7412 low. If this support is not taken out soon, the market is telling us that it is strong, even in the face of a head and shoulders. Keep in mind that consolidations are trend continuation patterns, not reversals. Price may still be in the reversal zone, but that does not mean it will produce a bearish reversal.
On top of that, it is a holiday in the U.S. which is very likely to affect volume and make for a range bound market. Over the next two and a half days, U.S. participants will be focused on everything but the markets. That is why the stock market closes early and forex brokers widen their spreads. Obviously this holiday is not celebrated around the world, but U.S. volume is a big factor in these markets.Over the years I learned it is best to avoid trading all together during this time. Just something to keep in mind.
In summary if this market is going to be a short, let it make the first move. This means it is okay to miss the initial move which has to break the relevant supports, then look to get in on a shallow retrace (day trading especially). When markets are weak, they reject resistance levels FAST and do not retrace right back to highs in a matter of hours. That is why I am more convinced that this is a consolidation and setting up to make a run for the 8500 resistance level over the next few days (low volume doesn't mean the market won't move at all, it means the movements have a greater tendency to be more random). Do not be confused by the head and shoulders because the general trend is still intact which means at the moment, this market is likely to go higher. These conditions do not fit the criteria of my swing trading plan at all, so I will continue to stay flat.
Comments and questions welcome.
BTCUSD Perspective And Levels: Still In Reversal Zone.BTCUSD update: Gyration leads to all time highs once again. As this market is pushing higher, it is still within the reversal zone. The swift pullback from 8315 to 7760 in a matter of hours is a reminder of how thin the market is at these levels and how high the risk of retrace is. I will explain.
Thin markets are markets that move. Thin refers to the lack of volume that often gets in the way and makes a market sluggish. Thin markets can be good when they are in your favor, but not so good when you need to get out. The 550 point gyration shows how fast things can change in this market.This type of noise can fake out many traders both long and short, that is why it is so important to have a agile mindset and be prepared for anything.
Whatever the reason behind that move was, the market shrugged it off and now making new highs, but it is not out of the clear. The chances of a bearish reversal are high in this zone. Which means if you are long, take the profit while you can, and if you are looking to get short, it is in a convenient spot but the structure just isn't there yet.
In my previous report I wrote about waiting for a bearish reversal structure like a double top or lower high on a larger time frame. At the moment, even though this market is on a new high, it is in the convenient position to present a reversal. The trigger is the break of the 8050 low. Why 8050? It is the low of an inside bar on this time frame. The low of the current candle (8187 once it is closed) will also serve as a short trigger. In order for these levels to be valid, price needs to decline off the current high, quickly and paint an upper wick. If none of this bearish price action that I am describing occurs, then it is NOT a short, especially if the 8500 level is taken out.
What I just described is an example of what a short looks like on a day trade time frame. As you can see, this market can move hundreds of points within a couple of hours and then reverse again. That is why I strongly emphasize day trading strategies if you have the skill and plan. The most important part of this is having expectations that are in line with your strategy. If you think you are going to open a day trade short and make 1k points, your expectations are out of line and that will most likely lead to a tendency to hold when you should not be. This is why I always stress not to mix strategies, especially if you are newer. It leads to taking risks that are unjustified for the smaller time frame trades.
Also during times like this, the news feeds, blogs and other outlets will be capitalizing on this event to gain attention and drive traffic to their sites. They will say all kinds of outrageous things like "10K Just Around the Corner!!!", you must not be seduced by this. Whether you follow the news or not, everything you need to know about where the market is likely to go is on your chart. It is a matter of recognizing patterns, understanding proportions and interpreting candles.You are better off consuming how to analyze, than consuming well executed marketing strategies.
In summary, the basic formation of a trend is currently in place. You have a series of higher lows and and higher highs, which makes it reasonable to expect higher prices until a clear change takes place (like a reversal). In terms of proportion and structure, this market is in a position to change, or fail, but it has not shown its hand, YET. Keep in mind, a normal retrace can take this market back to the mid 7100s (.382 of current bullish structure) and as a swing trader, THAT is the level that I am most interested in buying into (if the criteria of my plan lines up there). The market is not forcing you to take risk, and you do not always have to be in a position to be in a "trade". When the risk is unattractive on both sides of the market, you can always stay out. Like they say, "Flat is a position" and I am staying flat.
Comments and questions welcome.
BTCUSD Perspective And Levels: Runaway Train?BTCUSD update: New all time highs as I write this, right into the 8250 target area. The next level to watch for is 8500 which is the top boundary of the reversal zone.
Yesterday I updated my previous BTC report, pointing out that price was in the process of breaking out of the bull flag formation and on its way to 8k. This price action is very clear and very strong. If you are long from lower prices, this target area is a good place to lock in some profit. Keep in mind when I write that, I DO NOT mean sell your whole position. Taking some profit at highs is a good habit because it reduces risk and you are selling while you can, and NOT when you have to. Give some of it to the buyers while they are buying.
Remember, the higher it goes, the risk of retrace increases that is why you do not want to buy highs, you want to sell them. This does NOT mean this market is a short either. After the .618 resistance area was cleared without any bearish structure in sight, I have been warning about shorts. There is no structure on the larger time frames or breaks of any minor support levels. Even though the risk of retrace is high that is not enough to justify a short. There are market conditions where the risk is unattractive for both longs and shorts and this market is in that situation now.
If you want to participate in this action, the only way to keep risk within reason is to day trade. I write this over and over. The bearish structure will appear on a 15 minute chart, and a reasonable stop is 30 to 50 points on such a short time horizon. So is your profit target. If you risk 30 points and you are up 50 points in a matter of an hour, you take the profit, not try to hold it for a home run. That is why I also repeat, IF you do not have a solid day trading plan and you do not know how to define stops and targets on small time frames, then do not trade this market at all. It is too fast and requires an agile mindset.
What is the reversal zone? I have been referring to this as the "fakeout zone" in previous reports. It is an extension that is measured from a range high or low. In this case, a measurement from the 5400 low puts the reversal zone boundary at 8500. On top of that, price has reached the 8250 target area which is a 1.618 extension projected from the 6300 low. Add to that, the bullish structure that has lead to this high is a clear impulse wave with 5 distinct legs. Together all this means price is in a convenient area to present a bearish reversal pattern or structure. This is why I say take profits, but do not short until the larger time frame structure is present (a double top, lower high, pin bar).
Another thing to consider, shorting the high in an attempt to get in at the top is the same as buying a market when it is making new lows in an attempt to catch the bottom. It is a losing proposition because the one time that you are right does not cover the losses for the other 5 times you were wrong. If this market is going to retrace, it will begin with the initial wave, followed by the failed high or lower high. The retest and failure is the best time to short, so as long as the market keeps pushing highs, shorts should not be taken on larger time frames.
In summary, this market is making all time highs which is not that surprising considering the recent bullish structure. While the world will be celebrating this event, keep in mind price is within the reversal zone (below 8500) and is a very risky buy or sell at the moment. Since I do not short these markets, my only choice is to buy, and the level I am most interested is the 7180 area (.382 of bullish structure). A bullish reversal on a smaller time frame is likely to offer attractive reward/risk for a swing trade at that level while the market likely aims to retest the high once more. Overall, do not worry about missing out on longs or shorts, the opportunities will materialize, just wait, recognize and repeat.
Comments and questions welcome.
ETHUSD Perspective And Levels: Breakout Or Fakeout? The Sequel.ETHUSD update: After breaking the 355 resistance zone high, price touches the 371 target before running out of steam. Is this market poised to break through the 400 level? The signs are not there. YET.
In my previous report, I wrote about the minor range breakout, the minor resistance within the larger resistance zone, and a potential retrace back to the 315 area.(It went to 320 instead). I also explained the 371 extension which price has now touched. Why is this market not going to the moon?
Here's why: Price has finally broken beyond resistance levels that have been in place for weeks now. That is certainly a bullish sign, but it has stopped within the fakeout zone which is capped by the 374 level (this zone is an extension measured from the 275 low). And touched the 271 extension (1.618 projected from the 286 low) and just stopped, forming an inside bar at the moment on this time frame. If the momentum was still present, it would keep going or at least close out on the highs of the candles.
Based on this price action, I am anticipating a minor retrace back to the 335 area (.382 of current bullish swing). That is also an old resistance which should now act as a new support (inversion). IF this market can produce a higher low in this area, the next leg up could be the 395 historical peak (it will have to break through the 371 high and close strong).
IF this market can break beyond 395, then the 406 extension is the next target (1.618 measured from the 321 low). Based on the way price is moving now, it is reasonable for this target to be reached within a week if structure remains bullish (remember things change fast).
The current candle has less than 8 hours to close. If it closes within the range of the previous candle and then breaks the high (currently 364), then bullish momentum is likely to continue. If instead it breaks the low (currently 350), then it is more likely to retest the 335 support. I am interested in a swing trade long IF the market can find support and a bullish reversal on a smaller time frame at that level.
In summary, this market is now showing significant signs of buying after breaking above the long time 355 resistance level. If price can maintain the bullish structure by presenting a higher low somewhere above 335, it is then more likely to retest the 392 level and beyond which makes it worthwhile for a swing trade strategy. I will be watching the 335 to 340 area for a bullish reversal either on a smaller time frame, or a candle on the larger time frames and evaluate risk from there. I will also be watching for a reestablishment of a rangebound market until a significant catalyst can come along and really drive price. In case of a range I will be looking for trades in the lower support area of 300, and 275 if this market decides to retest those levels (which does not look likely at the moment, but it is a good idea to be prepared). It is more important to be flexible and manage risk than anything else in this game. I report what the market is saying, not what I think or what anyone else says or writes. Forecasting is about analyzing clues and projecting scenarios that MAY or MAY NOT happen, and as the market unfolds you adjust based on the NEW information as it becomes available. That is what short term speculation is all about.
Comments and questions welcome.
