Watch Your PnL - Market Analysis for Jul 24th, 2019

Couple Points:

1. When we entered this correction, how many questions, day after day did I get regarding what would turn me more immediate bullish. Well, that answer is always the same, but I personally was surprised to see how the shallow retraces of this market until recently left people trained to look 'perma-higher'. As the weeks have warn on those requests grew more rare. Now, if you are still in that mode, note we have our first setup for a deep wave 2. It is not confirmed yet. I need the corrective wave 2 then the break of last night's low. But regardless of confirmation or not, I battened down my hatches last night. Wave 2 need not be deep. I consider the potential of breakdown enough to go into a stronger bent toward preservation. 

2. Not all charts have the same setup. The charts that do not (EOS and LTC) may be indicating that the setup in BTC and ETH are false, or it is the other way around. It is this transitional times that make analysis tough. Note that the analysis and the trader are two different people. The analysis is academic and not going to call out a setup that is not there due to another chart. That's bad practice, and prevents the analysis for seeing what is, and leads to presumption. If I was to practice that, I assure you my analysis will be come less valuable as I wont' see the subtleties I need to see. However the trader in me is intuitive and street smart. When I see a number of charts stretch into weakness, he'll take off risk even if a chart even if it is working ahead. And, he'll certainly not put on new risk until more clear. 

Take analysis for what it is, but at all times listen to your PnL and sometimes that means risk just needs to be reduced. I am doing that now until more is clear. I'll I see right now is a transition that is not yet confirmed. I am not at all going to say I have a strong edge. But I am going to heed the warning of the setup in BTC and ETH. 

When a market may be in a transition my first tactic is to size down and observe and watch for more confirmation. 

Ryan Wilday hosts the Cryptocurrency Trading service on ElliottWaveTrader.net.