ETHUSD Perspective And Levels: Waiting For BTC Breakout.

24 Jul 2017

ETHUSD Update: Consolidation continues with the addition of minor bullish structures. I am looking to add to my position if price revisits the 224 minor support. BTC uncertainty holds these markets back.

This market has been gyrating within a large triangle since 7/20 with a new higher low established at the 224 level (I wrote about this level in my previous report. See link). Consolidations like this one, where price is making lower highs and higher lows, usually lead to a broader price move once the breakout occurs. Often, the magnitude of the move is related to the length of the triangle which means IF this market breaks out to the upside, and you project the length of the consolidation vertically, the next leg up should find it's next resistance around the 270 area. Which would present a minor resistance within the 250 to 280 zone already evaluated in previous reports.

In my opinion, the market is being held back by the lingering uncertainty around the BTC Segwit on 8/1. Even though a hard fork is no longer an issue, it appears participants are hesitant which becomes obvious when you compare the BTC 4 hour chart to the ETH 4 hour chart. Same chart, different price scale. When BTC breaks out, I expect ETH to follow.

Keep in mind, a consolidation in terms of order flow is large number of market participants taking positions. When the market breaks out, one side of these participants will be wrong and will amplify the price movement in the direction of the break as they get out. If for whatever reason, there is a bearish catalyst, and there is a bearish break, it is possible to see prices fall below 163 again if the longs are forced out. In which case, not only will I be stopped out (my current stop is at 207), but will prompt me to reevaluate my bullish outlook.

In summary upon a revisit to 224, if price action justifies a long I will add another 10% of my usual position size (still keeping my long position relatively small) with an additional add upon the upside break of 241, totaling 25% of my usual position size. That is my current plan based on the market structure at the moment. This market is waiting for the BTC breakout, and will continue to gyrate until a catalyst sparks price action one way or the other. Since bigger picture structure is bullish, I expect supports to have a better chance of holding and look for buying opportunities. Let's see how this plays out.

Comments and questions welcome.