LTCUSD: Triangle Within Triangle. 240 Target Reasonable?

LTCUSD update: Forming a higher low (similar to the BTC pattern) within the broader support range of 186 to 139 broader support zone, with selling pressure being absorbed around the 160 level. Often, broader support zones such as the one this market is gyrating within provide attractive areas for positioning.

As I wrote in my BTC report, higher lows typically lead to higher highs, which is a classic momentum reversal pattern. The fact that this structure is forming within a major support area adds to the probability for a broader bullish move. This bullish move is confirmed when the price pushes through the 240 area (.618 area of the most recent bearish swing and the 0.382 area of the overall correction).

In the previous LTC report I mentioned that I was long with a 50% position size from 230.01, and would look to add if we if the price pushes to an extreme low with a selling spike through the 200 level. This does not mean that when we broke the support level I simply put in a buy order. Trading takes patience and I was looking for a pattern or price action that would signal the likelihood of a bullish reversal. The structure of the correction, the recent consolidation which has formed off the support level with a higher low all happening within the context of a broader bullish structure still makes this market attractive for longs in my opinion.

This is a position trade over a longer time period which does not require the precision of a swing or day trade. Shorter time frame trades require tighter stops. I am not using stops at all here, and will rely on active monitoring of the trade and careful position sizing. I am looking to add on the appearance of a new bullish candle pattern such as a pin bar or inside bar.

Keep in mind that institutional traders can not readily short these markets directly. Other than a few exchanges that allow margin trading, the only way to sell these markets is by selling your holdings. This often leads to a general absence of selling like we saw in BTC before the futures began trading. As a result, price action will more likely have a tendency to consolidate and gyrate around broader supports, rather than fall dramatically unless extreme news comes out.

In summary, effective positioning requires incorporating the context of the big picture and the structures and patterns of the more immediate time frames. It is important that you know the type of trade you are looking to take before you take it. For me, LTC is a position trade because of its slower and more stable movement over time. Building a position on short term weakness and then slowly distributing it back to the herd when they come rushing in at highs is the general plan. By keeping risk under control with sizing, I can see more clearly and recognize where to add rather than being uncomfortable or nervous which often leads to being shaken out. As long as this market does not become obsolete any time soon, it has reasonable potential to retest the 240 level and possibly even the 300s which is where I will be looking to lock in profits IF the market lets me.

Questions and comments welcome.