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.
Hi Mark, very clear explanation about pin bars and their meaning. I'd like to add that if you watch a pin bar unfolding, you can often see if price is driven up by buying pressure from below or by "suction" from above by market makers retreating to higher ground. In the end, price goes up to close near the high in both cases, but when the climb from the low is due to market makers suction, it's very likely there will be no follow through. Suction is easily recognized by the frequent gap opening in the book accompanied by relatively low volumes, meaning the price climbs up in discontinuos steps and each step is relatively flimsy in terms of volume thickness. All this is best seen in very short term charts at 1 or 5 min intervals. This said, it can happen that the prices is "sucked up" to such a significant level to then attract real buying pressure from below and this can be spotted by a marked increase of volumes.
These technicalities aside, I personally think price will at the very least retest the previous low and likely dig even deeper by the end of the month with a couple short lived bounces in between. Personally I am 50% cash at the moment and I am very seriously considering converting another 30% from BTC to cash even at a loss, because if BTC were to go to new lows (dragging any other coin down with it, including LTC) in the 4000$ region, my "potential" loss would be bigger than the "real" loss I'd have by liquidating my BTC position now. In the long term BTC would most likely come back up and so if I hold, the loss would remain only "potential" but how long would it take for BTC to go back to 12-14000$ region from 4000$ ? and the longer it takes, the more risk that some systemic event intervenes to force a trend change... if I sell and take a loss now, I will have twice the amount of cash to invest once the bottom is in... so now, I don't think I will be sitting on my "virtual" losses and waiting this time...
Of course, if BTC goes up from here, then by selling I would commit a grave mistake... so where's the line in the sand, where's the level below which a retest of the February low becomes much more likely than going up ? I think it's yesterday's low at 7675$, if the price closes below that level, I think it becomes excedingly likely the next stop will be in the 5700-6000$ area
BrunoDanteSampaio
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@nxm, One thing I tell you.. all these probabilities sometimes make me think it's a 80% gambling thing...
nxm
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@BrunoDanteSampaio, in truth it is.. there's a superficial layer of statistical probability applied using TA tools on a seething unpredictable raw mass of fear and greed
Hi Marc ,thanks for your perfect analysis, i used it,could you please update it. We need an update, thanks
andrewpomerans
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Thanks!
CryptoJC
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Thank you very much for your analysis, a good read!
Even though LTC/USD is still in a declining movement right now, I feel cautiously bullish, especially since the LTC/BTC pair is holding up that well despite all the Bitcoin fud dominating the market right now and influencing so many alt trends.
Here is my Litecoin Bitcoin pair chart for comparison:
These technicalities aside, I personally think price will at the very least retest the previous low and likely dig even deeper by the end of the month with a couple short lived bounces in between. Personally I am 50% cash at the moment and I am very seriously considering converting another 30% from BTC to cash even at a loss, because if BTC were to go to new lows (dragging any other coin down with it, including LTC) in the 4000$ region, my "potential" loss would be bigger than the "real" loss I'd have by liquidating my BTC position now. In the long term BTC would most likely come back up and so if I hold, the loss would remain only "potential" but how long would it take for BTC to go back to 12-14000$ region from 4000$ ? and the longer it takes, the more risk that some systemic event intervenes to force a trend change... if I sell and take a loss now, I will have twice the amount of cash to invest once the bottom is in... so now, I don't think I will be sitting on my "virtual" losses and waiting this time...
Of course, if BTC goes up from here, then by selling I would commit a grave mistake... so where's the line in the sand, where's the level below which a retest of the February low becomes much more likely than going up ? I think it's yesterday's low at 7675$, if the price closes below that level, I think it becomes excedingly likely the next stop will be in the 5700-6000$ area