As sellers take over the STEEM/BTC pair and push price to new lows some of us might be asking the question..how low will it go?
Lets take a look at some analysis and see if we can find the next support level for Steem.
This analysis is on the STEEM/BTC pair on the 240 minute timeframe. Data provided by Poloniex and charted in TradingView.
Previous Analysis and Reflection
If you were following my previous analysis you would know I took out a small long position at the completion of the AB=CD harmonic pattern at the 1.618 extension. Also, this level was a possible support level, shown by the Fibonacci Support Cluster 2 on my chart.
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If you were following my live trade, you would know that I was stopped out of this trade. Being a trader, one has to be fine with loosing because it happens quite frequently. In fact, I barely win over 50% of my trades. The way I am actually successful at trading is because I stick to my plan and the [risk to reward ratio] on my trades is 2 at a minimum.
If you look at my previous trade you could see that the risk to reward ratio is 4.25. Even though the trade was a looser the risk to reward ratio was quite good so in retrospect I am ok with taking the trade. In addition, the long position I entered was very conservative. I had further downside targets in mind where the third Fibonacci Support Cluster sits so I did not risk much on this trade. -Please note that the Fibonacci Support Cluster 1 was erased from my chart because it was no longer relevant. The 2nd support cluster is invalid so I will erase the Fibonacci Support Cluster 2 from from my chart for my continued analysis.
Where are we now?
Continued selling pressure is pushing the Steem price to new lows for the 7th consecutive day. The bears have been relentless in this battle and are clearly winning the war.
Sellers have finally broken out of the [descending channel] and price action still looks very bearish. The daily chart looks gruesome for the bulls.
Our next "possible" support level that I am looking at is the Fibonacci Support Cluster 3. After drawing several fibonacci: extensions, retracements and projections from key "high and "low" levels and many of them converged in this area. I will be watching price action carefully in this area and will be looking for another possible entry.
Please note, as the trend continues to go down, entering a long position is counter to the trend. Countertrend trading requires a certain type of personality and trade plan. My method of trading is based on harmonic patterns that predict reversals in the market. This type of trading style requires practice, backtesting, and of course plenty of study before putting it into real practice.
Here is a small definition of Harmonic Trading as explained by the creator of Harmonic Trading, Scott Carney.
What is Harmonic Trading?
Harmonic Trading is a methodology that utilizes the recognition of specific price patterns and the alignment of exact Fibonacci ratios to determine highly probable reversal points in the financial markets.
This methodology assumes that trading patterns or cycles, like many patterns and cycles in life, repeat themselves. The key is to identify these patterns, and to enter or to exit a position based upon a high degree of probability that the same historic price action will occur. Although these patterns are not 100% accurate, these situations have been historically proven. If these set-ups are identified correctly, it is possible to identify significant opportunities with a very limited risk.
Case for the Bulls
It looks like the bulls are loosing this war as the bears push the price of Steem continuously lower. There might be some hope on the horizon at the Fibonacci Support Cluster 3 but that is further down the road. For now I would say the bulls only have two things going for them.
RSI
RSI is still oversold and should start turning to the upside soonVolume
Volume has been decreasing of late, and the bears appear to be getting exhausted. They might tire out soon and could see some upward pressure soon.
Case for the Bears
- Downtrend
It is clear we have been is a downtrend for quite some time. Until we see a clear reversal this looks very bearish - Lower lows
The bears have managed to push the price down day after day. this is very bearish. - The descending channel
The bears have already broke the descending channel to the downside and looks like a breakout. - The 50 and 200 MA's
Price continues to trade under the 50 and 200 MA's which is bearish.
Conclusion
For the meantime I will sit on the sidelines and will wait to see if support holds at the Fibonacci Support cluster on my chart. If you look at my chart you can see price follow my red down arrow. Lets see where price goes from here. To me it looks like we are in store for more down.
