ETHUSD Update: 306 Resistance Can Lead To Triangle.

ETHUSD Update: The 279 support was tested and held as price has bounced back up to 300 but this market looks poised for a minor consolidation with 306 being a tough resistance at the moment.

I will begin with the wave count since it offers the best perspective on this situation. Elliot Wave can be very complex especially if you get too detail oriented with it. It is best used for a broader "road map" in my opinion which means the wave counts do not have to be perfect.

With that being said, there are two scenarios I am watching for. The first is the the failed high off of the 306 resistance (.618 of broad bear swing). I interpret the failed high as the minor Wave 4 unfolding into a small triangle between 306 and 279 for a limited time (couple of days) before resuming the uptrend which can take this market into the 350 highs.

The alternate scenario is that the current leg up is the minor Wave 5 that will complete the larger degree Wave 3 which will take this market into the 350s sooner. This scenario would be in play if the 315 high is taken out.

Either way, the broader trend is still intact as long as price stays above the 263 support level. Remember that these evaluations are not predictions, they are interpretations based on price action. This includes observing wave counts that imply certain market conditions, chart patterns and price structures. These are clues that indicate which way the market is more likely to go. People expect all science, and forget that there is an art to this.

In terms of trading, I am still interested in the 279 support. I am leaning toward the first scenario of going into a small triangle and trying to buy a retest of the low for a more attractive risk/reward. If I can buy in the low 280s and use the mid 250s as my stop, again using the 330s to 350s as a target, my RR is close to 2:1.

If a breakout of 315 occurs instead, that is a buying opportunity also, it just carries more risk and is not exactly my style of trading. There are two ways to adjust though, buy smaller with a wide stop, or buy regular size with a stop just below 300. With a 330 to 350 target, your RR can be 1:1 or slightly better.

In summary, this market is strong and I prefer to buy pullbacks. A failed high off the 306 resistance can put this market into a minor triangle which can retest the 279 area while a push beyond 315 signals a breakout and opens the door to the 350 area highs sooner. Both scenarios offer buying opportunities, it just depends on your style of managing the risk associated with each one.

Questions and comments welcome.