ETHUSD Perspective And Levels: Bullish Sign In Bearish Momentum?

22 ก.ย. 2017

ETHUSD Update: Double bottom in place at the 250 level which is a sign of strength within a bearish context. A break above 270 will confirm the reversal and will begin to build an argument for higher prices.

The 260 support broke as expected, but a double bottom at 250? (Just under the .382 level). I was hoping for this pattern somewhere between 237 and 219, but like I have written before, the market is going to do what IT wants to do, not what I think it should do.

270 is the .382 of the recent bearish swing and if price pushes back above, will further confirm bullish momentum. These are great signs for longs, but the problem is the 271 to 291 resistance zone is still in the way. If this price action were occurring at a more attractive level, like the low 200s, or 237 to 219 zone, or even above the current resistance zone in the high 290s, I would be willing to get long. The problem is buying at the current level for a swing trade does not offer a reward/risk that is attractive enough.

As much as I like this reversal formation, I know that the context of the situation carries more weight. Since this price action is happening within a bearish momentum environment, I know that there is a better chance that the 250 support will break.

Keep in kind any catalyst can come out and ignite BTC and all these markets are going to go the same way. I wrote about my plans for an extreme price environment in my previous report, while at the same time, I am waiting for a swing trade setup that offers attractive reward/risk. As the environment changes and offers new information, I adjust.

So here is the scenario that I would like to see at the moment (this does NOT mean it will happen): A break below the 250 support which can push price into the 237 to 219 area. Once there, I would like to see the kind of price action that the market is exhibiting right now. A double bottom or higher low along with a minor resistance break. This scenario will allow for better reward/risk in my opinion because the reversal would be occurring within the .618 area of the recent bullish swing. This would allow for reasonable target placement in the 280s to 290s while using something like a 25 point stop. That is my current swing trade plan based on the information I have at the moment. If the market doesn't play along, then I stay flat. (This is a separate strategy from my extreme price scenario).

In summary, reversal formations can appear anywhere randomly and waiting for them to appear around projected levels in the right context is what allows for stacking favorable probabilities. The current double bottom is a great example of a reversal formation, but it is not supported by the context. If I am wrong and the market breaks higher from here, I will simply adjust to the new information and look for the next opportunity. Swing trading requires a ton of patience, but offers the chance to participate in larger moves while requiring little attention. This does not mean there is no opportunity at the moment, just not within criteria of my plan. It all depends on your plan, time horizon and risk tolerance.

Comments and questions welcome,