LTCUSD -6.94% update: Bearish momentum leads price deeper into the major support zone of 186 to 138 area. In this report I want to highlight two levels that offer new buying opportunities IF a reversal pattern materializes in the near future.
Buying opportunities? Why would I be looking to buy in a "bear market" ? The reason is the time horizon of the trade I am taking, just like with BTC -4.26% . The herd gets fixated on the small time frame price action and misses out on WHERE we are on the bigger picture. This is no different than being extremely bullish when the market is making new highs. Position trading requires the ability to put prices into perspective and also consider general fundamentals which in my opinion are still bullish .
Referring to Elliott Wave rules, Wave 2 is not supposed to retrace more than 100% of Wave 1. If we consider that simple wave count here, this "bear market" as the herd calls it, is most likely a bottom of a broad Wave 2. Price even has room to test lower lows and still offer potential for adding to a position trade long.
To put prices into bigger picture perspective, the 186 to 138 support zone is the .618 area of the broad bullish swing. Within this zone is the 165 to 153 minor .618 support that price is testing at the moment. This area is the first place to consider longs upon a bullish reversal pattern. The Second price to consider is the 118 level which is the lower boundary of the reversal zone measured from the 137 low. This area also happens to be just under the lower boundary of the broad descending wedge formation. This area is a good place to watch for extreme price spikes and bullish reversal patterns as well.
Why buy into a weak market? I look to buy supports and sell resistances, it is a best practice. I am not moved by the hype and noise that the herd often over reacts to, especially at turning points. Instead of focusing on the immediate bearish momentum and accompanying drama, I focus on the fact that price is still within the vicinity of large magnitude supports which for me is a place to buy, not sell. Keep in mind, I am not day trading this market. As a day trader, shorts make more sense. Where the less experienced go wrong is they do not know how to form reasonable expectations for shorter time horizon strategies and let greed determine where profits should be taken, rather than probabilities.
In summary, there are two ways to go about positioning for a broader bullish move that has not materialized yet. Buying small amounts and averaging into the lows, lightly and carefully so if price collapses altogether, the loss will be limited. Or the more conservative way which is WAIT for bullish signs off the major support area and then start buying. The second way gives up better prices for a more comfortable experience (momentum going your way and less pain). It is important to remember position trading requires longer term perspective, careful sizing and exclusion of margin in my opinion. Just like in BTC -4.26% , as long as these markets and in an expanding economic space, it is just a matter of time before a string of bullish catalysts grab hold and the next bullish wave unfolds. I want to be positioned for that scenario, not chasing it. The ability to do this effectively is to buy when everyone is selling, and as long as we maintain the current supports, or test slightly lower, I am looking to continue to build a long position.