ETHUSD Update: Nice breakout of 310 on rising volume , but no follow through while BTC is making all time highs? Although price structure remains bullish , I interpret this lack of follow through as a sign of weakness. If BTC is the leader, what happens if there is a healthy retracement in that market? Or is the correlation unwinding? I don't want to be long from these levels to find out.
First let's cover the bullish argument. The 279 level is still intact, there is a higher low at 295 which is a sign of strength. The breakout at 310 occurred, and price is sitting on the recent swing high. If BTC was exhibiting the same behavior, all this price action would be acceptable, but BTC is pushing serious highs and that adds new context to this situation.
It is very possible that this market is just slow to react for whatever reason, and will grind higher, but I would be very cautious at these levels. Certainly not looking to put on any new trades, risk is too high. At this point I will be focusing more on watching the risk. If this market falls below the 295 minor support and retests the 279 level, that would be the only area I would consider for a long, using the 263 level as a stop. If 263 is taken out, then this market is more inclined to exhibit a larger consolidation.
Keep in mind, if the market has a pull back of this degree, the larger trend will still be bullish . It would have to go below 208 to put the larger trend in question. I am not predicting the degree of pullback, all I am saying is if it is a little more uncomfortable than expected, do not be distracted by all the noise that will follow. Keep your eye on the price action around the major supports for clues.
In summary, in terms of price structure, this market still exhibits strength, but in light of the BTC performance, this market is acting relatively weak and when I see this kind of behavior I become very cautious. To be clear, I am still long term bullish , but this lack of follow through may lead to a retest of the deeper support levels.
I will answer all the questions and comments from the previous reports and this one also, so any additional comments or questions are welcome.
I think sometimes because bitcoin is competition with other currencies like Eth you see opposing movement. I think the recent run over 4000 by BTC will stall under 4100 and then you will see eth and other currencies that fell while btc flew pop back up. I think many traders pull their money or some of it out of eth and others to buy btc when it makes runs and vice versa
kaylbee
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@uncomfortablepants, I agree. With the excitement around BTC right now, it's soaking up all the money. Hopefully once BTC settles, the other bigger altcoins pop up.
MarcPMarkets
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@kaylbee, it very well could be, but how was it that when BTC was working it's way up to 3000, ETH was participating? Maybe the correlation that occurred during that period was just a coincidence? Meanwhile we have IOT tripling in price. Does that mean people are converting their BTC to IOTs? When the leader leads, the top markets, like ETH should follow in my opinion.
kaylbee
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@MarcPMarkets, True, but on those couple days when BTC was rallying from 3500 to 4100 all the big coins were in the red and only BTC and a few much smaller coins were in the green. Unfortunately, when BTC dropped today, LTC and ETH also dropped, so that money is not going back into them when BTC drops. Anyways, can't wait to hear your next analysis on a good ETH entrance point!
NoCode326
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@uncomfortablepants, Exactly, traders pull money from one to chase another. That is precisely what you are seeing with BTC right now.
Marc you keep mentioning lack of volume - I don't understand that. Fact is ETH volume has been higher than average since July 19th. And has had days over 2bn. Your comments seem to be attempting a rationalization for not buying back at $241, then waiting for a pullback to $220 while I (and am sure others) told you ETH was going to $290 the day it broke $260. Only to go all the way to $320. If we see $265 in the coming days, I hope you pull the trigger.
MarcPMarkets
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@NoCode326, I use volume on Btifinex as my gauge and on 4 hour bars. I am not looking at aggregate volume because I am only interested in orderflow. I realize Bitfinex is not representative of the entire ETH market, but I believe it serves as a good reflection. I am not trying to rationalize anything. When I swing trade, I buy pullbacks, not highs. So if a market goes higher without me, I am waiting, not rationalizing. When it comes to my trading plan, I ONLY listen to ME. I learned this lesson a long time ago. Everyone has different risk profiles and reasons for seeing what they see. You don't absorb my losses if you're wrong, so no offense, but you can tell me ETH is going to 1000, I am not going to buy it UNLESS MY analysis and trading plan tells me to buy. If price pulls back to an area that makes sense to ME, I will buy. Thank you for your support though.
mattyttv
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@MarcPMarkets, Like your style, keen to learn about your trading plan. Would you be willing share your trading rules. Matt
MarcPMarkets
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@uncomfortablepants, this unique orderflow pattern very well may be. What you are describing sounds more like sector rotation.
conall88
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I feel like ETH and BTC are diverging their relationship and becoming less linked to each other as time goes on (albeit in a gradual manner). I feel like the strength of NEO and the quiet waters of ETC are probably having a bigger impact on the big picture of ETH than BTC is at present.
MoeProblems
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I've been thinking about this idea that Ethereum is showing weakness since it has not moved with bitcoin. While I and many others were also expecting it to gain momentum with Bitcoin, I don't think the crypto market has reacted how most analysts expected it to since the BTC/BCH fork. At the end of the day Ethereum is still right behind bitcoin. If there are especially weak coins I would look toward litecoin and Ripple.