ETHUSD update: Price pushing into major resistance zone and breaks the 764 key level. Like I wrote in my earlier report on S.C., buying in this area for a swing trade carries a high degree of risk.
When a market trades like the way this one is, where it consolidated above the trend line and broke out to new highs, it looks like an easy trade after the fact. What you don't see is the amount of risk if the trade does not work out. As I wrote in a previous report, price needs to either retrace to the relevant support (now 591) or push into the resistance zone which it has.
Environments like this, that are trending but carry a lot of risk on larger time frames are better suited for day trading. The reason is time. If you took the breakout above the 700 level, if it faked out, since you are day trading, you can get out immediately for a small loss. If the trade works out, you capture some of the move, and then have the option to hold it longer once you have a nice cushion to play with. Working with smaller time frames, you will have more signals and conditions to consider that can provide a level of nimbleness that is not within the scope of a swing trade.
With this being said, I am not looking at this market from a day trading perspective, only the swing trading perspective which means I must stick to my swing trade rules and criteria no matter how enticing a market looks. The 741 to 845 resistance zone is the .618 of the recent bearish structure. From a swing trade perspective, it is not an area to buy, it is an area to consider selling or locking in profits if you are long from lower prices. This is where the reactionary herd of buyers pile in and offer a nice liquidity spike to unload inventory into.
The 764 resistance is the .382 of the entire bearish structure relative to the 1420 high. Price has not cleared it dramatically, so there is still a high probability that this market falls out of this zone. If the market does sell, the 591 support (.382 of current bullish swing) is the level to watch for the much more attractive reward/risk swing trade long.
In summary, as I wrote earlier in today's S.C. report, patience is essential during times like this. Do not let your greed get the best of you. No market goes in one direction forever. It will retrace at some point, and that is when we can evaluate the next swing trade opportunity. As this market continues to unfold, we will be posting updates and signals (if the market cooperates) on S.C. only.
I agree with you here, as always. There is just far too much risk for a buy at near $800, especially after going this strong and this long without any type of real retracement. This is a suicide buy for a short-term long position. My only regret is that it has gone this far without a pullback. I was waiting for confirmation that we were surely headed up, and I just missed the boat. As you always teach, you don’t want to jump into a trade just because you’re bummed that you’ve missed a good price and let it run too far. “Better late than never” is a foolish decision, especially for taking a long position after a run like this. Patience. I will wait for the pullback you are showing here. My days of FOMO and emotional trading are over, thanks in some part to you- the other is credited to “learning the hard way”. The other thing you’ve taught me is to abandon the mentality that this is the last trade opportunity in the world. You didn’t miss opportunity, you just missed *this* opportunity.
TheGush
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This other advice to remember: know your goals. If your goal is short term profit, this is a risky buy. If your goal is long term investment, buying here at $800 will be seen as a good decision when ETH is $2,500+ in the longer term. I remember buying ETH at $200-something. I sold at $350 or so. It went up, and I jumped back in at $700. At the time, that seemed like a ridiculous buy. Then it doubled to $1,400. Then it got chopped in 1/4th to $350. I thought it would not see $700+ for several months. It took like two weeks to recover there. What did I learn? Well, I learned that I would have made more money had I just held on to my coins from the start.
Again, if you’re a long term investor, then keep that in mind. You will lose hair (and money) if you get all worried about these swings and try and start becoming a day trader to get out of (temporary) loss.
If you’re not a day trader, then don’t try to day trade. So many people think that because they know how to place an order that they’re a master trader all of the sudden. Nothing wrong with following these charts and learning - that’s great. They’re interesting and they’re educational. But if you’re a beginner, don’t delude yourself that you’re some guru because you have an exchange account and know what a head and shoulders pattern is. You’ll get eaten alive.
theredbaronZ
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@TheGush, to get to be a guru you need to get a few teeth marks and road rash and rug burns. No other way to really learn it.
theredbaronZ
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I should add that your calm and sensible approach has added, I hope, some of the same to my trading. I used to be much more anxious and tried to chase the moves and jump on the quickly to win the trades. I realize now this is a reactive herd attitude and I feel dumb for getting caught up in the enthusiasm and FOMO. Fortunately I didn't lose much since the long bear trend cooled my jets so to speak.
Now I sit at the feet of the master with calm and patience waiting for him to speak his, no doubt hard-earned, wisdom.
GreaterNinja
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I have 850-900 and $1119 and $1265 as targets. Sure it can pull back, but I don't think it is.
siwe7
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@GreaterNinja, if we retrace, i think it will be 700, at worst.