ETHUSD update: Beginning of retrace appears to be in progress with BTC making it back to 6500 after a significant low made earlier today. The swing trade criteria has lined up and a long has been triggered at 485 (sent to followers on S.C. earlier).
Even though these markets have been very bearish recently, they do not decline in a straight line. Retraces happen, and when they offer greater potential reward than the cost in terms of risk, a trade can be justified.
This is the situation with this market. In terms of structure, price is in the process of establishing a failed low formation. This is happening while bouncing off the reversal zone boundary of 458. A level that has been in place since May.
On top of that, this retrace is occurring within the 544 to 464 support zone which is the .618 of the recent bullish structure. The trigger developed in the form of a bullish pin bar off the 458 level. When it becomes hard to argue with the signs, it is time to trade.
The rest of the trade details like the stop and target are available on S.C. I chose a conservative target because bearish structure is still in place. The bearish trend line and the 625 resistance level (.382 of current bearish structure) have not been taken out. Until they are, it makes more sense to expect less from the long side.
In summary, we have been writing adamantly about accumulating coins during this time of unjustified negativity. As Andrew wrote in an earlier article on BTC, if you believe in the merit of these technologies for the long run, meaning over years, then there is no reason not to buy extreme weakness.
If this retrace turns out to be strong, that is when everyone who is hesitant to buy now will feel comfortable jumping in. And guess what we will be doing? Locking in profits.
It may feel counter intuitive, to buy markets that have been so weak, but the comfort zone is not your friend. Especially in financial markets. Remember, it's about probability, not profitability. And if the trade stops out, it will still be considered a correct trade since it was within the criteria of our swing trade plan.
To me, one of the best trader on TV.
Well done mate.
BRRD
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I don't agree with this analysis for two reasons:
1) "Unjustified negativity" - the SEC has recently said that most ICOs are securities of a kind. This marks the beginning of a drawn out process that will include court cases, convictions for fraud, etc. While I agree that Ethereum has interesting potential applications these are experimental at this stage and it makes sense to attribute a significant part of last year's meteoric rise to the explosion of mindless optimism around ICOs, the majority of which are right now being confirmed as illegal activities.
2) Sometimes you set your analysis of altcoins into the context of Bitcoin - other markets follow Bitcoin - but not this one. Well, the Bitcoin market looks decidedly weak or at least very uncertain, with no quick resolution coming to save the bulls. Won't ETH be infected by this uncertainty / weakness?
BRRD
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Apologies - I see you are still setting your swing trade in an overall bearish context. My bad!
@BRRD, I agree with this statement but I have to add that, for me, the SEC negative sentiment was a smoke screen. I'm shocked that nobody mentioned the NYT, LA Times, and Bloomberg pieces that spoke to the finding of research that outlines how Tether was used to inflate the value or the cryptocurrency market. Yet, this is a new article and was mentioned on television as well. WIth this much exposure I am at a loss for how little people have heard about it. It came on the heels of the CFTC announcement and to me, this was a huge bearish signal. Huge bold letters "Bitcoin is a scam".
The events that took place earlier today to liquidate shorter, were planned and instigated by a small number of large traders. John McAfee even had the audacity to hint at it the day prior and it people in forums were told to close their shorts (knowing the clearly would not). Had I not been trading at the exact moment I would have lost much more and many lost everything. This is unacceptable. The crypto market has become a predatory stomping ground for those who became uber rich from the epic rise and will go to any length to extend the bubble.
Jour
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Bravo Marc,
BR
cycler
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hi, good advice, this is a scalpzone, take care, we are in a dangerous period, bull markets can give good profits even after the first wave, but bear markets can take your money in one good nights complacent rest.
TomPower
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hang on Marc, just because Ether is up 50 bucks doesn't mean we r in a new bull at least according to every other pundit out there who follow EW theory. Get this they are looking for 3.5 k, yah you heard me! Hey but remember when we were trading at 8k, there target was 12-15k , its a great game their playing!
Well done mate.