ETHUSD Perspective And Levels: Initial Selling And 345?

30 בנוב׳ 2017

ETHUSD update: My 516 target was touched before the rug got pulled and is now showing signs of a top. My swing trade was exited at 499 on the way to 500 according to PLAN for a 30+ point profit (in a matter of hours). I have NO intention of getting back in until signs of stability return.

The fact that this market went from 516 back to 400 within hours is definitely a reminder of how risky these markets are. This is why it is always MORE important to calculate risk, than it is to anticipate profit. I did not expect my trade to hit it's target in a matter of hours, I figured a day or so, but I knew my risk going into it, and based on the structure and the signs at that moment, the RISK relative to the potential that I evaluated made sense for MY swing trade plan. It was not an emotional play, and I have no fear of missing out as some less experienced trader suggested. I placed my target at the time I entered the trade at 499 simply because I figured 500 will pose some psychological resistance even though I had an extension at 516. I know the limitations of TA and I understand that I am not dealing with absolutes, but instead estimates.

At this point, all the markets have developed a similar structure and this can be the initial leg of a more bearish structure. I have NO intention of buying any near by supports until I see clear signs of stability. The signs that imply further weakness include the long wick off of the 516 extension, the decisive break of the consolidation support, and two minor support levels just below it. There are now two resistance levels to watch for and they are the 450 area (previous support) which is now the .382 resistance of the new bearish swing. And the 476 to 492 area which is the .618 resistance relative to the new bear momentum as well.

Based on the concept of market symmetry, if this corrective move is going to unfold in a zig zag where the first and third leg are of equal length, then that puts the potential completion of this selling effort at 345. This is not an absolute prediction, but offers some estimate of how far this market can retrace before the selling is more likely to exhaust itself. This is the same type of measurement that I use to generate the extension targets when the market is pushing highs.

Since there is a very bullish bias in these markets generally, price may find stability sooner, but I will let the structure appear before I look to evaluate any new longs. One scenario would be a larger time frame double bottom in the 400 area which can take at least a day or two to unfold.

In summary, when everyone is celebrating new highs and eating up all the hype, it is easy to forget the risk. These markets are extremely risky and can get the rug pulled from under them at a moments notice. I keep getting messages from traders who seem to have this built in assumption that these markets are normal and that they are stable investments for the future. Stable investments do not move at the rate of 5 to 10% in a day higher or lower. These are extremely speculative markets which are ideal for short term trading strategies because they change so fast. I kept urging people to lock in some profits WHILE YOU CAN, and instead I get, "So how much higher is this going to go?". Selling the top is a lottery ticket, a long shot, low probability. Focus on mitigating risk, and high probability strategies like defining levels and waiting for structure to better confirm trades. If you're only plan is to "just make money" then you should not be in these markets. As far as the current structure, there is likely at least one more selling leg and I have no interest in buying at the moment until stability is clear as defined by MY plan.

Comments and questions welcome.