ETHUSD Perspective And Levels: Range Break Out.

13 oct. 2017

ETHUSD Update: 350 high is reached which is just under the 352 border of the .618 resistance zone that this market has been hesitating below for weeks. 357.50 is also the 1.618 extension of the entire bullish swing which serves as a potential target.

The move in BTC is impressive and highly irrational, but the move in ETH, although promising, is not that impressive because it is still inside a major resistance zone. And just like with BTC, I have no intention of buying highs, especially euphoric highs such as these. A retrace to the low 300s would be an area that I would now consider for a swing trade in light of this new price action, even though the zone has not been fully cleared. The reason is the low 300s is now the .618 area of this new upswing, and if price can present a reversal pattern below 310, it would be reasonable to expect a retest of the 350 high at least. That scenario offers better reward/risk in my opinion, much better than buying the high and hoping it goes higher.

These are hot markets at the moment, with BTC almost reaching 6k and pulling back 300 points within hours is ripe with day trading opportunities. And these conditions are best suited for day traders because you can participate, have the potential to capture relatively large moves while maintaining your risk on a small time frame. I do not day trade these markets, but if you have the ability to provide the attention required by this type of strategy, it is worthwhile for now.

Why not take swing trades? Risk is too high. I know this is the unpopular thing to say, but that is how my trading plan protects my capital. Once these hard forks are out of the way, who knows how these markets are going to react. Investors who are in from great prices are playing with house money and even though any retrace will be unpleasant, it will not be worrisome either. People who think these coins are going up big from here, are the ones who will feel the most pain in my opinion and are more likely to be pushed out of their positions when the retrace occurs. I do not want to be caught in that, so I will simply wait.

The fact that these markets are finally making significant moves does at least open the door to new potential opportunities, but the factors have not aligned within my swing trade strategy yet.

In summary, markets that go up in straight lines, like BTC and now ETH can give it back just as fast. I have seen it happen enough times in other markets to know. If you are in, ride it for as long as you can, but at least lock in some profit along with way. The fact that prices have made these highs is certainly a long term sign of strength, but to expect prices to continue at this rate is unrealistic. As I have written about before, my plan required these markets to demonstrate strength, and they are finally presenting the bullish structure and momentum to justify looking for longs, just not at these levels. Remember if you want more action, trade smaller time frames. I have no problem waiting for the type of opportunity that my plan is best suited for, it is just a matter of the factors lining up, and eventually they will.

Comments and questions welcome.