LTC USD Trade: Long Limit 133.50 Stop 123.50 Target 1: 149.25 R:R= 1.57
LTC USD Update: After fluctuating around the 132.72 reversal zone boundary, price is showing some bullish activity. An argument can be made for the 137.84 trigger because it is an inside bar. The criteria for a swing trade long has been met but follow through continues to be limited. Instead of taking risk at the 137.84 breakout, we are looking to capitalize on the price noise that can occur between current levels and the 125 reversal zone boundary.
Lack Of Momentum
Usually when a setup triggers, follow through is relatively quick. This means prices should be pushing rather than hesitating. All of the major coins are in a technical position to rally, but the problem is a lack of catalyst. These markets need a dose of motivation which can come in the form of a positive surprise, news or announcement. Charts cannot help to predict news, but they do tell us when a market is in position to benefit most from such a condition.
Play The Noise
When price action is noisy, placing a limit order under the market allows us to capitalize on a general condition while taking less risk. The draw back is the order may never get filled. If it never does, that is okay too because that means no risk will be taken. Missing moves will never wipe out your trading account.
Here is the premise behind the trade call: 133.50 is just above the 132.72 reversal zone boundary which is relative to the 141.75 low. Buying activity is present here and any retest of this level followed by a reversal is a welcome opportunity.
See similar strategy explained in BTC here.
The stop is a couple of points below the next reversal zone boundary of 125.68. There is plenty of room for this market to shake out weak hands and reverse somewhere between here and 125. If price collapses, which is always a possibility, the stop will protects from further loss.
The 149.25 serves as the first target or target 1. This is just under the 150 resistance (.382 of current bearish structure). Based on this target the reward/risk is 1.57 which makes it acceptable to sell off a fraction of the position to reduce risk and lock in profit. Since this market has much greater potential over the long run, it is a good idea to hold on to some and see how far it goes before the next sell signal occurs.
137.84 is a swing trade long trigger. If you prefer to use that to enter this market instead, then you must accept the increased risk of a retest to the 125 area. Since we believe this scenario has a higher probability, we are issuing the conservative signal only. Also the reward/risk is less attractive relative to the 150 resistance.
About Missing Moves
Every once in a while, a follower will come up with the argument that missing a move in the market equates to losing money. This is the greed argument and why those followers do not trade for long. If you want to trade and invest successfully, which means consistently, then there is only one priority and that is conservation of capital. Without capital you CANNOT trade AT ALL. When you miss a move, no matter how great the move is, your capital is not lost. It is still sitting in your account, waiting to be allocated to the next opportunity.
Opportunities are an infinite resource in any liquid financial market, while your capital is not. The key is to recognize and wait for the most attractive ones. One of the hardest skills to learn as a trader is how to wait, also known as patience. Practicing the art of patience alone will have a positive effect on your trading performance.
With that being said, we will wait and see if the market will offer better prices by placing this limit order below the market. From there, it’s up to the market. If the market goes without us, we will wait for the next setup. Very simple objectives to follow.
Questions and comments welcome.