LTCUSD: 149 Low Hint Of Reversal? Bears Still In Control.

LTCUSD update: Pin bars appear across the board at key support areas.In order for a solid reversal to follow through, the next couple of candles need to close strong. If they don't, all of these markets become more vulnerable to retest the newly established low.

Pin bars at such a relevant location signify that the predetermined support areas of all the major coins are attracting buyers. When a long tail forms on a candle, it is expressing an important story. It is telling us that as ugly as the market looked at those lows, there were not enough new sell orders to keep momentum going. The long tail is evidence that there are more buyers around these lows which should not be a surprise. The key to using this valuable information is waiting for "follow through".

Follow through is when price presents a change, (pin bar) and it is then followed by a dramatic push in the new direction. If there is no dramatic push which should happen relatively fast (next bar or two) then that means buyers are not serious yet. What is more likely to happen during a lack of follow through is price will often test the low once more, only to fake out again.

The reversal process often begins with a candle formation, but this does not guarantee that the next move is simply higher. IF momentum does not pick up, then watch for a retest of the 151 minor reversal zone boundary low. Possibly even the 139 low, before significant buying activity returns. Even though price is now within the 186 to 138 major support zone (.618 of entire bullish structure), and the 161 to 139 minor support zone (.618 area of recent bullish swing), it still has plenty of room to gyrate before enough buying comes in to push prices dramatically higher.

In summary, I often write about the importance of defining your time horizon and developing your plan around it. I have been managing a position trade in this market and that means I will keep adding to it carefully IF the market offers those type of opportunities. Adding carefully means waiting for distinct signals, and fractional sizing. In other words I am managing inventory. All of these markets are now in very attractive buying locations, but that is not enough to buy, especially if you are managing positions. Price is still expressing bearish momentum and if it cannot produce a series of strong closes, it will be much more likely to retest lows. This market and BTC are still far enough from their respective lows (106 in this case) to produce a very broad higher low formation and that is what I am waiting patiently for to add to my position again. If price wants to go lower, I will just hold what I have an wait it out. This is the risk you take when looking to capture broader moves.

Questions and comments welcome.