LTCUSD: Double Bottom Territory? Wait For Reversal Patterns.

LTCUSD update: Price is pushing into extreme low territory as these markets continue to sell off. As I wrote previously as ugly as they look, if you are building inventory and not using margin, then situations like this are buying opportunities. Most importantly, you must not get sucked into the hype. Selling the bottom is the natural choice for the herd, not the trader who is prepared.

As bearish as things appear at the moment, BTC has not made new lows. I do not see price below 6K yet, instead it is retesting important supports. Same goes for this market, price is attempting to retest the 118 reversal zone boundary which went as low as 106 previously (twice). There are no signs of reversal so price is poised to go lower. How low can it reasonably go?

Based on the 106 low, the next reversal zone boundary is the 71 level. This means price can reasonably make a slight lower low and then reverse dramatically which would appear as a failed low. So the levels to watch are the 118 area, 106, 100 (whole number) and 71 as the extreme. IF a reversal candle establishes itself around any of these levels, that can be the beginning of a broader double bottom formation.

Keep in mind, as long as none of these bullish signs appear, you can use the bearish trend line that was established in February as a guide to avoiding any new longs until stability reappears. I have been wanting to call a swing trade in this market, but it refuses to break that bearish trend line, and until that happens, it is reasonable to expect bearish momentum to continue.

In summary, the crowd is always wrong at tops and bottoms. We are near a bottom, do not react like a member of the herd. These weak hands are being shaken out as a result of their fear and lack of planning. If you are holding a position trade like I am, it is a matter of holding what you have and waiting it out. The only reason why this can work is because there is no margin involved (it is no different than buying physical gold or silver and stacking it). As a position trader, I'm an inventory manager. When wholesale prices are available, you add to your stack, but carefully. The way to do that in this market is to wait for the bullish signs to return. Remember I am looking at these markets from a long term perspective, I believe in their merit AND I am willing to take the loss IF they fall apart. This is why risk management through careful sizing is so important. Well thought out sizing is what helps you maintain composure in times like this as opposed to reacting to the uncertainty. Don't react, anticipate.

Questions and comments welcome.