For Every Action... ETH/USD Overheats a bit - Needs a Breather
Last night, ETH/USD flew over a well established rising trend line and I made the comment that such a move, while fun to watch, is usually NOT a good thing if you are a bull with anything other than an extremely short range outlook for your trade/investment. Why? Well, there's the cold and hard historical tendency that such 'overheated' moves tend to happen near tops (short term, long term - all a matter of scale). Then, there is the reasoning that seems to explain why this is so. We all pretty much know that EMOTIONAL investors tend to be the last to buy and the last to sell. That means they routinely buy HIGH and sell LOW. And, the evidence of this is the tendency for tops to be overheated and bottoms to be formed in the throes of panic. Level headed people with a plan do not sell in a panic nor buy in a last ditch attempt to catch the train as it leaves the station (or, so they THINK).
So, the overheated move last night DID prove to be short-lived as the ETH/USD pair ended up giving up a very quick 10%+ and heading back UNDER the rising resistance line that it had taken out. This makes a second point of interest that I have constantly reminded my subscribers at sp500chart.com - RISING lines of resistance, once broken over, tend to be porous when tested on a back test. This is NOT true of resistance lines that are sloped downwards or flat.
The silver lining here (watch the publisher link the price of AG to my use of that word...) is that so far, the return to the narrower rising green channel has NOT produced undue pressure on the support line. The best case here would be for ETH/USD to return to this already steeply rising channel (green) and continue upwards in a more controlled manner that reveals a more level=headed advance, less prone to emotional outbursts. Even if this 'upper channel' were to break down, we still have a second rising line of support that could serve to maintain the bullish trend.
So, the overheated move last night DID prove to be short-lived as the ETH/USD pair ended up giving up a very quick 10%+ and heading back UNDER the rising resistance line that it had taken out. This makes a second point of interest that I have constantly reminded my subscribers at sp500chart.com - RISING lines of resistance, once broken over, tend to be porous when tested on a back test. This is NOT true of resistance lines that are sloped downwards or flat.
The silver lining here (watch the publisher link the price of AG to my use of that word...) is that so far, the return to the narrower rising green channel has NOT produced undue pressure on the support line. The best case here would be for ETH/USD to return to this already steeply rising channel (green) and continue upwards in a more controlled manner that reveals a more level=headed advance, less prone to emotional outbursts. Even if this 'upper channel' were to break down, we still have a second rising line of support that could serve to maintain the bullish trend.
Comment:
ETH/USD now paying the price for the emotional late comers that took it up too far and too fast. Now looking for the lower green line to get tested in the high 250's or low 260's.