I long for LTCEUR, as she gives mixed signals

Datetime: 22 Feb, 2018, 21:33 Berlin Time

What is the current state of price movement in the trading time frame (4H)?

LTC tried to break out of the descending trend line in the form of the second leg of an uptrend but it failed. The failure is happening in the form of a downtrend, which has reasonable momentum. The price is currently near 160. It is unclear whether there is an important support level here. This level has served as resistance once or twice in Jan, 2018 (see action on 29 Jan e.g.), but it still doesn't look like an important level. Also, during the first leg of the previous uptrend, the price simply sliced through this level as if there is nothing.

The downtrend continuing or a range is the path of least resistance. The downtrend is still well contained within the Keltner Channel, indicating that the selling has not reached climactic proportions yet.

What is the current state of price movement in the higher time frame (1D)?

In the higher time frame, the current level at 160 looks more significant. There is no support or resistance there per se, however this level featured prominently in the rapid downtrend of January. This is the level from which price dropped dramatically to the lowest point.

In the higher time frame, we were in a downtrend. Here the action is similar to XBTEUR. The sharp upward movement after the lowest point in January, which is accompanied by a significant high in the MACD is indicative of a reversal of the downtrend rather than a simple pullback. However the previous high at 251 is yet to be taken out and the descending downward trend line is yet to be breached. LTCEUR tried to break out of the downward channel recently but failed.

The upward movement after the January low seems more of an uptrend in this time frame. The sloppy upward channel is marked in the chart. Given the current price situation, we can conclude that the uptrend has definitely ended and it's almost impossible for the price to get back into this channel.

Given all this, a range is most likely in the cards. The most likely range is between 137.90 and 176.20 The other option is that the downtrend will continue, even though this is not very probable.

What is the current state of price movement in the higher time frame (1H)?

The market is in a range following the third leg of the downward movement. There is a Wyckoff spring (but not too pronounced), which could indicate that the downtrend will reverse. Also the probability a fourth trend leg is always low. But another leg is of course the path to least resistance.

Here things are more grey. A continuation of the downtrend and a reversal seems equally probable.

What is most likely going to happen in the trading time frame?

Let's start from the higher time frame. It seems that a range between 137.90 and 176.20 is in the cards. It's right in the middle of that range at the moment. The lower time frame says it could go any way right now. When all is said and done, I think that XBTEUR will lead the way here. If it goes up, LTCEUR will go up too and vice versa.

XBTEUR recently broke out below the important level 8181.1. The question is whether the breakout was successful, and there is no indication in any direction to that question yet. The last pullback in the downtrend looks questionable in the lower time frame. There was a relatively high momentum and the current low is not a significant low. Most likely, but not by much, XBTEUR will see a reversal and LTCEUR will go up to test 176.20 again.

What trade is reasonable given these circumstances?

Going long seems reasonable, though position size should be smallish since this is not a high probability trade. The stop can be set a little below the last low. The take profit level should be the important level at 176.20.

Trade that I executed:

Trade type: Limit buy
Entry: 157.73
Stop Loss: 149
Take Profit: 174
Time of Entry:
評論: Time of Entry: 23: 17 Berlin Time

Results will be posted when the trade concludes.

Disclaimer: This isn't investment or trading advice. Please DYOR.
交易結束:達到停損點: The price hit the Stop Loss.

Loss: 14.36 %

Comments: It sucks because I was right about the price movement. But I set the stop too close to the support of the range. We had a brief breakout, which took out my stop and then it immediately reversed and continued on a parabolic upward journey. Too bad, but lesson learned.

What's the lesson? Place stops where market volatility or failed breakouts cannot take you out. Also pay attention to support/resistance level of lower importance near the market structure that you are trading. If there's one close by, set the stop assuming that price might probe this unimportant support/resistance level too.
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