Market Review:
Yesterday, I mentioned that although the market experienced a rebound, the decline would continue. We had already positioned ourselves for short trades. So far, Ethereum reached a high of 4556, and Bitcoin reached a high of 124140. Ethereum dropped to a low of 4317, and Bitcoin fell below 121000. Although we didn't hit our target, it was still a decent profit. I exited all short positions at 7 PM and started to go long. Congratulations to those who made a profit.
The market changes rapidly; for more trading inquiries, contact me: I am Zhang Xiaoming (public account).
Market Analysis:
Today's focus is on why I decided to start entering long positions at this point. The reason is quite simple; as the saying goes: "One burst of energy, then it declines, and finally it exhausts." Whether it's Bitcoin or Ethereum, today's decline is not as severe as previous declines. Bitcoin's drop on the 7th was 4.52%, while today's drop is only 2.36%; Ethereum's drop on the 7th was 7.34%, and today's drop is 5.22%. The decline has significantly narrowed. If the market wants to pull back directly to the level, then the second wave's space should be greater than the first wave to push out the third wave, which can be referenced from the drop at the end of September. Currently, there are two possible scenarios for this type of movement.
The first scenario: The market pullback is basically in place, and the bullish positions have been largely cleared, allowing for a potential rally.
The second scenario: The market aims for a more thorough clearing of bullish positions, creating a false bullish signal to strike hard against the bulls again.
Regarding the probability of these two scenarios, I believe the second scenario is more likely, as shown in the chart:
Taking Ethereum as an example, if the market rebounds again to around 4650, it will complete the clearing of shorts while also creating a false bullish signal, leading the market into a frenzy to challenge historical highs, followed by a significant drop. This type of movement is much more damaging than a direct decline at this moment.
Trading Strategy:
Enter long around 4350, with a stop loss below 4300, targeting 4450--4650;
No short positions are recommended for now.
As for whether there is a third scenario of a direct decline, I won't make a judgment here, as a trader, I trust my own judgment. I won't analyze Bitcoin here, as I personally do not wish to participate in Bitcoin at the moment; my trading focus will be on Ethereum.
Author's Note:
As always, trading has no absolute right or wrong; analysis is merely a pre-judgment. The key is to find real-time opportunities based on market changes. Everyone's viewpoint cannot be the same; if you have your own judgment, please trust it. If you choose to follow someone, then follow them to the end. This is just personal advice, for reference only.
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