ETHUSD update: New all time high made at 557.99 which is showing a pin bar on the 12 hour time frame at the time of this writing. There is no question, these markets are all going up in vertical lines, but where do you buy in? And how much longer will these markets soar?
I have been cautious which the less experienced will not appreciate yet, but years in the futures and forex markets have taught me what reality is. I started my career in markets just like this back when average daily ranges of stocks were 30 to 50 points per day. Back then I had no clue, no point of reference, until reality set in. That market generosity was active for about two years. No one can forecast when reality will take hold of these markets, so you have to do your best to participate responsibly BUT just remember markets moving 30% in a day is extreme and not the new "normal". Learn the difference now before you have to learn the hard way.
As far as this market, it is a tough short term hold because of it's wider swings. My previous trade produced some profit, but my upside was limited by moving my stop to break even at 420. It happens and unlike many, I do not complain about a profit. The focus now is where is the next opportunity.
Trading responsibly means following best practices and not throwing caution to the wind which carries very seductive rewards right now. Forming bad habits now plants the seeds for big losses once reality catches up to these markets, because you will not know the difference and will jump in too big at the wrong time. Right now anyone can say "Buy!" and look like a genius, no skill required (which is another sign of euphoria).
Market philosophy aside, where are the levels to buy into this market? I am most interested in two areas. The 476 area is the average highs of the previous consolidation which can act as a support. A retrace and reversal here on a smaller time frame (4 hour) would offer attractive reward/risk using the previous low area of 420 as a reference point for risk and the current high as a target (potential retest).
If price continues lower than the 470s, the next area I will look to evaluate is the 453 to 426 zone which is the .618 of the current bullish swing and also the middle of the consolidation (which often acts as a solid support). A reversal off of these levels can offer reward/risk of more than 3:1, so IF the market retests, it is an area to pay closer attention to for bullish reversal formations.
The 550 level happens to be the upper boundary of the reversal zone measured from the 390 low (based on market proportion). Which makes it the point of reference to measure potential short term reward from, and also the area to avoid for any new longs. The current pin bar in this area is a sign of weakness and implies a retrace is likely.
In summary, in these rare and wild times, developing productive habits will allow you to stay in the game in the long run if you are trading on the shorter time horizons. It is possible to swing trade and invest at the same time by keeping your trades and investments separate, or by trading around a core position. Many have taken a gamble at high prices and it has paid off, and continues to , but this same type of gamble only works on occasion, and is extremely costly in a non euphoric environment which this market will return to, just like every market. One of the best practices you can learn is letting the market come to you and not being seduced by vertical lines. One way to accomplish this is simply to define and wait for support structures in strong markets. At least these markets are clear as far as strength goes, so it is just a matter of defining a risk that is in proportion to your account size and your tolerance level, and waiting for a level that offers a clear potential reward. TA provides the framework for these best practices even in vertical markets like these.
"Forming bad habits now plants the seeds for big losses once reality catches up " "anyone can say "Buy!" and look like a genius, no skill required (which is another sign of euphoria)" LOL I couldn't agree more with this post!!!
ideazman
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I am so happy that I experienced the dot com era and learned many critical lessons from the experience. Those of us that were around then are indeed fortunate as this is clearly the same situation, one can profit nicely and one can just as easily get completely wrecked. The difference for me this time is that I'm actually investing and have decided to learn TA so that a. my investing strategy is solid and b. that I can learn to successfully trade shorter times and be profitable. I am highly motivated to learn TA and as you so adroitly point out learning "good habits" is a must! By doing the hard work now and not throwing darts at a board I am setting myself up so that in a few years I can make extra money for myself and continue to do so in retirement. I'm going to take a closer look at your website and see what you offer. Thank you again for all you do for the community Marc.
ChadRitchie
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@ideazman, it sounds to me like you are "trading" not investing. They aren't synonymous ;)
Cryptomerchant
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I Think its the last opportunity this year to buy some whole units of ETH. The sole reason its still $500 is that its too new. BTC has already gone to space. I had 1.5 btc by june. But now I have only 0.2 trying to daytrade! ETH was $10 january. It went more than 5000% and Btc went straight from $5000 to $18.000 while I was figuring out what to do! Eth outperformed Btc. So I dont care if it plummets because I'm holding the coins for long term. Maybe the daytrade technics pay out in the future when there will be no more coins to mine and it becomes stable like fiat currencies. In this aspects the cryptos are different animals, they cant be treated as normal assets. Soon it will be $1000 $2000 etc. Appreciate very much your generous sharing of knowledge. Been learning a lot. Tks!
Amit26
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I dont know a lot about 'Technical Analysis', but analyzing the mass hysteria, I can say for sure ETHUSD is going to $1000 very soon. And for that matter, I wouldn't be surprised to see $1400 or $2000 as well
BRRD
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@Amit26, the thing about the mass hysteria is that history shows it appears to become the most pronounced at the top of the market.
This can create a very strong illusion for newcomers that they are joining a party that is in full swing, when in fact the vibrant euphoria is a sign that the party is ending - it is the inexperienced bulls who dominate the market, those who throw all their money in at the end in one go.
The thing about the crypto markets is trying to judge whether the balance has tipped from those with more of an investment mentality (interested in the tech; long-term view on investing; sensible approach to managing their funds; etc.) to those with dollar signs in their eyes and no long-term plan.
Partying with the latter crowd doesn't end well. Could be wrong but personally I have no doubt we are there now.
RealDaniil
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@BRRD, what is the basis of the analysis from above? on love or hate? likely
analyzing people's thoughts, you can not find out what the crowd is thinking about. respectively, when my friend threw off this post, and said that this post is a respected person. But a person, even if he is respected can not control the crowd =)
Sobsvtenno as expected, we saw growth
RealDaniil
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@BRRD, nothing personal to the creator of the idea, but I'm constantly surprised to see ideas based on love and hate. Why so many subscribers, what's the secret