These types of trades have two scenarios.

  1. Is BTC/USD over price and going to find the median with ETH

  2. Is ETH/USD undervalued and going to appreciate with BTC

With the way the current structure is forming, the view is ETH/USD is undervalued in this case and upside is higher probable.

ETH/USD

Key Points:

  • Caution – Price holding below the 200 EMA
  • Caution – Price holding below the 50 EMA
  • Would be great to see price reclaim 200 EMA, but the reward to risk ratio will be compromised.
  • 50% Fibonacci support level at 359 support
  • Divergence in the RSI at lower lows on price

Key Levels:

Support – 359, 350

Resistance – 50 EMA, 200 EMA, 390, 415

Entry Zone:

Optimal entry provides the greatest reward to risk ratio while supporting entry is a zone for reversal signals.

Optimal Entry – 359

Supporting Entry – 365

Candle Reversals for entry

  • Bullish Hammer
  • Bullish Engulfing
  • Bullish Piercing

The Risk:

As traders, it is your job to mitigate the risk and only trade structures that provide high probability and great reward to risk ratios.

If you are not comfortable with defined exit levels, experiment with Moving Averages to help set solid exit rules to protect your capital.

IF: Price breaks below 350 level– this would suggest the structure is not in our favour and would be wise to reduce exposure or close the trade until a solid signal gives us reasons to re-enter.

Reward / Reward Targets:

Optimal Entry 359 – Target 1 390= 3x Reward to Risk

Optimal Entry 359 – Target 2 415= 5x Reward to Risk

Supporting Entry 365– Target 1 390= 1.3x Reward to Risk

Supporting Entry 365– Target 2 415= 2.7x Reward to Risk