AVAX has met a major 2021 lifetime resistance area and rendered a strong sell signal in response. Is this the time to short?
How do we trade this? 🤔 We have three pushes up in a bull trend; the third push has made contact with a major 2021 resistance area, followed by two strong bear candles closing on their lows below the Daily 30EMA. What we need now is a test of the 30EMA as resistance followed by a strong bear bar closing on or near its low. This will be our confirmation bar and our queue to enter a short. Take half profits at 1:1 Risk/Reward then move the stop loss up to the entry price to secure profits. Swing the latter half of the position to 1:3 Risk/Reward just above the previous major support, or until a reversal pattern appears.
💡 Trade Idea 💡
Short Entry: $46.50 🟥 Stop Loss: $53.00 ✅ Take Profit #1: $39.85 ✅ Take Profit #2: $27.00 ⚖️ Risk/Reward Ratio: 1:3
🔑 Key Takeaways 🔑
1. Three pushes up into a bull trend. 2. Price has made contact with a 2021 resistance area. 3. Strong sell signal pushing below the Daily 30EMA 4. Wait for confirmation candle just below the Daily 30EMA to enter a short. 5. RSI at 48.00 and below the Moving Average, supports short bias.
💰 Trading Tip 💰 It's reasonable to take half profits at the first resistance target in a long trade, or the first support target in a short trade. Using a 1:1 Risk/Reward Ratio for your first target, you can move your stop loss up to your entry price, locking in profits. This allows you to watch the rest of the trade execute without worry of losing money. This helps improve trading psychology and the equity in your account.
⚠️ Risk Warning! ⚠️ Past performance is not necessarily indicative of future results. You are solely responsible for your trades. Trade at your own risk!
AVAX failed to break the Daily 30EMA and fell to the bottom of the channel support as expected. We skipped the pullback after the second leg down and had a sharp fall to the Daily 200EMA. Expect some strong support here.
I expect another pullback to the upside and likely, another test of this area with a possibility of a fall closer to $25 or $30. Bitcoins pullback has only begun during halving season, we need to watch that chart closely to see how it influences the crypto market.
No @ourgodfather, this is a reasonable scalp trade on the pullback to the channel support after three pushes up in a bull trend near a major resistance zone. The latter half of the position is a swing trade if the support line breaks which is again, reasonable after three pushes up, a sell signal and pattern at major resistance, and if the price fails to break the Daily 30EMA that's confirmation of the pullback and will likely lead to the typical 2-legged pullback where we can at least capture a 1:2 Risk/Reward ratio trade, but a 1:3 is not off the table per my analysis. We should wait for a buy signal to exit the trade in that case.
What are your specific criticisms of that analysis other than something about "me being on crack"?