ETHEREUM (ETHUSDT) DAILY BUY&SELL TRADE SETUPS 2020/12/24Long 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.
