ETHUSD update: Price has rallied since the pin bar high breakout at 677. Like I wrote in my previous report, it is possible to get a low quality signal that works out, but it leads to bad habits in the long run which eventually leads to losses.

Why was this signal low quality? It was the location of the pin bar relative to the type of trade we were considering. Setups like the one that appeared on 4/30 are great for day trading, since you can exit early for a small loss if it doesn’t work out. In that mode, since you are also looking for a smaller profit, your risk exposure in terms of time is much smaller. It is not the same for a swing trade.

The swing trade requires more time in the trade, which means a wider stop, which means the location needs to provide attractive reward/risk. Price action that is fluctuating well above any attractive support level and that is near a resistance does not offer any particular bias or advantage. As I wrote in the previous report, even though the momentum favored a test of the highs, it just doesn’t justify the relative risk.

When the random trade works out, it looks great after the fact, but many traders do not consider all the money saved from similar situations that did not work out so well.

ETHUSD 5/3/2018 3:30 AM EST.

Technical

741 to 845 is a major resistance zone (.618 of recent bearish structure). Within that zone. 764 is the .382 resistance relative to the 1420 high. This means IF prices pushes into this zone, it would be a more attractive area to sell. This is a good time to lock in profits from much lower prices, and reduce risk. Initiating new longs in this area is better suited for very short term strategies like day trading which I would avoid in this market.

The 591 support level (.382 of current bullish swing) is the predetermined level to consider for the next swing trade long. Price may not retest this level anytime soon, but until it finds a support, I have no intention of initiating new swing trade longs. There are plenty of other markets for that.

Patience is essential in situations like this. Emotions and hype run rampant when markets push highs. Separate yourself from the herd by following best practices: buy supports in strong markets, not resistances.

Leave a Reply