Bitcoin sentiment still remains bearish as our weekly inside candle is still exploring the prior bearish weekly engulfing.
Reviewing our trades from last week, DASH did have the entry dip and seems to be consolidating, while DOGE has surprisingly made good on sticking between 90-100 satoshis. Although our initial Bitcoin aggressive trade setup would have been stopped out, the “patient” trade setup to short 6620-6650 proved to be a valid idea. However, our initial entry price was ~$20 USD too high as price only hit $6598 USD. Regardless, chasing trades once they have already played out is not suggested. However, enter if you’re highly confident in the idea and remember to adjust position size based on the new risk/return.
Our next trade setup is based on the argument made this week that $6600 USD and $6200 USD might be forming into a range based trade-able zone, and as such, we can adjust our trading to accommodate this thesis. So, we’re looking to enter into a long which satisfies the range trading thesis, which means dips to ~ $6120/6200 USD are longing zones (with trend-line support), with $6600/6650 USD take profit/short areas. We are also potentially filling in a bearish flag structure, so also pay attention to the way price respects this pattern and be ready to close longs based on the pattern completing.
Closing daily candles under $6050 USD should be cause for concern for any longs, while closing daily candles with strength above $6700 USD would lend some strength to longer-term bullish trade setups.
Besides Bitcoin’s mostly somber trading week, Ethereum‘s volatility has proven to be prime trading grounds. Whereas the primary driver of sentiment in crypto has usually been Bitcoin, the past few days has seen Ethereum garner more attention as it “decoupled” from Bitcoin’s price movements.
Investors and speculators honed in on the soft ICO underbelly of the Ethereum economic ecosystem while the Ethereum founder’s misinterpreted tweets didn’t help. Although Vitalik Buterin has explained his tweets about price growth and Ether, it was still a bloodbath week for anyone holding ether, with the price dropping nearly -20% in three days. On Thursday, however, Ethereum showed some renewed vigor on the charts and has begun to paint some bullish reversal signals, with price bouncing from $169 USD to ~$223 USD over two days.
There are a few reasons to be bullish on Ethereum. Firstly, the price has entered into the lower order-block/consolidation zone ($130 USD -$200 USD) that preceded the breakout to its all-time high. Secondly, RSI has fleshed out a decently sized daily bullish divergence. Thirdly, there has been an increased volume on this dump to $169 USD, with high volume with a significant amount of shorts and longs opening up.
This is causing a noticeable “V” bottom pattern on the Volume Flow Indicator, which according to its creator, is a strong signal on which to enter a trade. Regardless of the recent narratives about ICOs who still have Ether that adds sell pressure on the market, traders should consider taking a bullish bias on Ethereum at these levels. This is a relatively large price range for Ethereum, so the price could still fall and find support at $150 USD – $140 USD. Entering into trades between $210 USD and $180 USD need to have wide enough stop and position size to account for the potential to revisit those lower prices. This is a longer-term multi-week trade and treating it with that time-frame in mind will be crucial to its success. Dollar-cost averaging down into a position might work out here.