In last Friday’s note on Ethereum, we were tracking a 40-day cycle low on the hourly chart. A harsher than expected pullback in global risk pushed price down through a potential support ledge around US$1,760-1,780 and price is now trading nearly 200 points lower.
Since we cannot short sell crypto, we are still stalking the cycle low to take advantage of the anticipated upside reversal out of this cycle trough. I have put some broader parameters onto the chart, namely the time location of the next cycle trough between now and the end of August and the price location
between here (US$1,580 ish) and US$1,230.
The best case scenario for an upside reversal has been and gone. Base case now is for an imminent rally. Worst case is for a hard test right down into the uptrend support line from June. Either way, we are waiting to go long and keeping our powder dry. The worst case with the deepest pullback means wait
longer, but is potentially better profit from the trade.
It’s worth noting that in trading out of expected cycle lows it is best to wait for proof rather than try to be the hero who picks the bottom tick. It’s good dinner party conversation when you get that right, but very hard to do consistently. That’s why it’s best to get the first little jump and pullback out of the way first. We might be looking at that set up right now and the low could be in, but we need more proof before pulling the trigger.