ETHUSD Perspective And Levels: One More Retrace? Then?

20 août 2017

ETHUSD Update: Market structure and wave count support the argument that this market is poised to reach the 350 resistance soon. It is a matter of catalyst.

First the 297 swing high needs to be broken, followed by the 315 resistance. The 315 break will signal that the next leg up is in play which can take this market to the 350 area that I have been writing about in previous reports.

It appears there is a rotation of order flow in these markets. One minute its BTC, then a bunch of newer coins, then BCH. It is tough to pinpoint where order flow will appear next. We must remember that this market as a whole, even though it has a enormous capitalization, has a very small population of traders and investors compared to the traditional financial markets. There are also other factors in play such as many alt coins trading against BTC or ETH instead of the USD which makes things much more complicated when it comes to measuring the relative strength relationship. A few months ago, BTC went up, and the alt coins went up also. Now BTC goes up and pulls back a few hundred points, and ETH is not really sensitive to it at all.

In terms of wave count, this market is in a very high potential position. I have been writing about being in a larger degree Wave 5. Within that wave, subdegree Wave 2 has established a bottom in the low 280s. Which means we are most likely in a subdegree Wave 3. Wave 3's are usually the ones that wow the world because of their magnitude (See IOT/USD for a recent example). A break above the 315 resistance will signal that the subdegree Wave 3 is in play and can lead this market to the 350 resistance relatively quickly.

It is also possible for price to retrace once more into the mid 280s before this new up leg begins. If this retrace occurs followed by a bullish reversal pattern, I would see this as another buying opportunity with attractive risk/reward. With a stop in the low 270s, and a target at 340, reward to risk is more than 3:1.

As price action traders, we must always be flexible and understand that anything can happen. Many less experienced participants still view technical analysis as predictions which is a mistake. This is not a weather forecast. We are gathering information about historical order flow and comparing it to get an idea of what can happen next. Charts are records of human emotion expressed as a series of price points and provide valuable clues if you know what to look for.

If a bearish news catalyst were to surprise the market, chart analysis will not be able to anticipate such an event. This is why I pay very close attention to the 279 and 263 supports. If price breaks below, especially 263, that would signal a broader consolidation is more likely to follow.

In summary, this market is in a position to realize a move up into the 350 resistance area it is just a matter of catalyst. Wave counts point to a subdegree Wave 3 which are known for large moves in terms of proportion. One more retrace into the 280s can offer another chance to buy at an attractive risk reward, but outside of that, it's just watch and wait. As long as price stays above 263, it is just a matter of stealing "the order flow spotlight" to get things moving.

Questions and comments welcome.