Cardano offers limited downside- Short tf (4hr) analysis
My original post for a possible sell off in Cardano can be found here
![Short term analysis [4hr tf] analysis for Cardano- SELL OFF!](https://static.tradingview.com/static/images/svg/idea-image-placeholder.svg)
I have updated that particular post as it was based on Elliott wave analysis. I decided to look at the trendline in Cardano in this post and also look at where support is to investigate what current price action offers in terms of risk to reward.
The current sell off in Cardano which started on Jan 4 2018 has a limited downside and this is exemplified by a break above its downward trendline shown in red.
Two possible scenarios for a bullish trade are given below:
(1) A breakout above the high made on Feb. 25 2018 of ~0.00003520 and then using the price low of ~0.00003054 as stop loss (SL). Using Target 1 as the range to take profit produces a great risk/reward ratio of ~4:1 if the bottom range of Target area 1 is used to take profit and a risk/reward ratio of ~6:1 if the bottom range of Target area 2 is used to take profit. In this scenario, the IDEAL point of entry (POE 2) into the trade is taken as 0.00003421
Range for Target area 1 = 0.00005507 and 0.00005940
Range for Target area 2 = 0.00006521 and 0.00006929
(2) If price continues downwards to the support and holds at the support range, then a long position can be placed on a breakout above support after price must have successfully tested the support area. The IDEAL point of entry (POE 1) into the trade is taken as 0.00002651. In this case, the stop loss will be placed just below the bottom range of the Support area at ~0.00002179. Using this IDEAL scenario will produce a risk/reward ratio of ~6:1 if the bottom range of Target area 1 is used as the point to take profit. Using the IDEAL scenario and targeting the bottom of Target area 2 offers even a greater risk/reward ratio of ~8.2:1
![Short term analysis [4hr tf] analysis for Cardano- SELL OFF!](https://s3.tradingview.com/k/KhGkIjLy_big.png)
The current sell off in Cardano which started on Jan 4 2018 has a limited downside and this is exemplified by a break above its downward trendline shown in red.
Two possible scenarios for a bullish trade are given below:
(1) A breakout above the high made on Feb. 25 2018 of ~0.00003520 and then using the price low of ~0.00003054 as stop loss (SL). Using Target 1 as the range to take profit produces a great risk/reward ratio of ~4:1 if the bottom range of Target area 1 is used to take profit and a risk/reward ratio of ~6:1 if the bottom range of Target area 2 is used to take profit. In this scenario, the IDEAL point of entry (POE 2) into the trade is taken as 0.00003421
Range for Target area 1 = 0.00005507 and 0.00005940
Range for Target area 2 = 0.00006521 and 0.00006929
(2) If price continues downwards to the support and holds at the support range, then a long position can be placed on a breakout above support after price must have successfully tested the support area. The IDEAL point of entry (POE 1) into the trade is taken as 0.00002651. In this case, the stop loss will be placed just below the bottom range of the Support area at ~0.00002179. Using this IDEAL scenario will produce a risk/reward ratio of ~6:1 if the bottom range of Target area 1 is used as the point to take profit. Using the IDEAL scenario and targeting the bottom of Target area 2 offers even a greater risk/reward ratio of ~8.2:1