ETHUSD Perspective And Levels: One More Leg To 500+?

ETHUSD update: 483 all time high touched which is just one point higher than the 482 extension target while this market is now consolidating and attempting to break higher. The next target extension is 516 based on the current structure in place.

Some people (critics) seem to think I am making up these target numbers. Just to be clear, these extension numbers are based on a proportion of the current price structure. There is no guarantee that the price will stop and reverse at these levels, but there is a greater chance. These proportions tend to act as natural inflection points that the market "herd" is more likely to react to. Whether it is self fulfilling prophecy or not, these proportions are very relevant in these highly emotional markets. So for the critics: I am not making them up, the market is.

That is where the new 516 target comes from. It is the 1.618 extension projected from the 395 low. Will this market actually get there in the next day or so? I am skeptical because 500 is a psychological level that can act as a barrier, but anything is possible. Since the 355 breakout, this market has been in the first leg of a large scale Wave 3. These waves are often powerful and to fit the rule, cannot be the shortest wave within the 5 wave sequence. You can see this more clearly on the weekly time frame.

Once this initial leg is complete, Wave 2 should be a relatively larger retrace than this market has been showing since the break out. As long as price stays above the bottom of Wave 1 which is 280, then it will be setting up for a 3 of 3 which can take this market much higher over the next couple of months. The retrace can take a week or so to play out, not a couple of hours or days. The most relevant level is around the 408 area which happens to be the .382 of this entire bullish structure.

Again it is important to be prepared for anything. IF for any reason this market goes below 280, then this wave count will be negated. I realize that almost sounds laughable at this point, I am just saying don't neglect that scenario completely.

As far as WHEN this market will retrace and offer a buying opportunity, there is no way to forecast that. At the moment, there are no signs of weakness. Price consolidates for a half a day and then continues to new highs which is what it is poised to do at the moment. Moves like this are rare and are like lottery tickets, but rates of change this rapid are extreme and not sustainable. Normalcy will return, it always does, in every market.

I will not buy highs. I have been saying that since 371 and here we are 100 points higher. I have seen moves like this before in other markets so I know how they play out. My plan is simple: Watch for a retrace, a reversal and go long at an attractive reward/risk. Based on the new high, I am watching the 450 support (.382 measured from 395), the 433 support (.382 measured from 350) and 408 (.382 measured from 286). The consolidation at the moment is setting up to continue higher rather than to any of these supports, so a break beyond 476 can also offer a day trade opportunity if you are willing to accept the risk. Keep in mind the bottom of the range is 454 which means you are looking at a max of around 20 points of risk to hopefully make 25 or more in a very short period of time. It's possible to figure out a tighter stop, but that is up to you. I am not day trading these markets and NOT willing to take the risk.

In summary, relentlessly strong markets like this are tough to trade because you don't know where it will turn. For the less experienced who do not know, these kind of movements are not common and if you are in that's great. My point is this: do not let your expectations get warped by a low probability condition. If you do, you will most likely have blatant disregard for risk the next time something like this appears to be happening, and you will give your profits back in the much more numerous fake outs.

Comments and questions welcome.