AVAX → Avalanche Reversal Imminent!? The Tipping Point is Near.
Avalanche (AVAX) is burning red hot on the charts and flirting with the idea of a reversal. Do we have the justification to short here? Or will the trend continue upward?
How do we trade this? 🤔
AVAX has three pushes up in this trend, three sell bars near the $44.00 level, and an RSI level of 82.00 and below the Moving Average. These are all signs that a trend change is coming in the near future and at the very least, entering a long position here is not justified.
It is reasonable however to capture some of the downward price action with the correct indicators. We need break below the bull channel support around the Daily 30EMA with a strong bear bar closing on or near its low. Followed by a retest of the channel support as resistance to confirm that the bull trend is over. At this time, its reasonable to scalp a short at 1:1 Risk/Reward around the $31.00 level, stop loss at $37.00, and take profit at $25.00.
It is also reasonable to go for a 1:2 Risk/Reward down to $19.00 after moving your stop loss up to your entry price and taking half profits at 1:1 Risk/Reward.
Until then it's wise to remain on the sidelines and wait for the correct signals to enter the market.
💡 Trade Ideas 💡
Short Entry: $31.00
🟥 Stop Loss: $37.00
✅ Take Profit: $19.00
⚖️ Risk/Reward Ratio: 1:2
🔑 Key Takeaways 🔑
1. Bull Channel, Bias to Long!
2. Three Pushes up in Trend with Sell signal, Signal to Change Trend.
3. Gap to Second Push Support Line.
4. RSI at 82.00 and below Moving Average, Strong Bias to Short
5. Wait for Short Confirmation bar before entering a position.
💰 Trading Tip 💰
Probability that the price will go the direction of the trend is low at the beginning (swing trade) and end (late scalp) of a trend. Proportion your position size, risk (stop loss placement), and reward (take profit placement) to the probability of profit at your entry price.
⚠️ Risk Warning! ⚠️
Past performance is not necessarily indicative of future results. You are solely responsible for your trades. Trade at your own risk!
Like 👍 and comment if you found this analysis useful!
How do we trade this? 🤔
AVAX has three pushes up in this trend, three sell bars near the $44.00 level, and an RSI level of 82.00 and below the Moving Average. These are all signs that a trend change is coming in the near future and at the very least, entering a long position here is not justified.
It is reasonable however to capture some of the downward price action with the correct indicators. We need break below the bull channel support around the Daily 30EMA with a strong bear bar closing on or near its low. Followed by a retest of the channel support as resistance to confirm that the bull trend is over. At this time, its reasonable to scalp a short at 1:1 Risk/Reward around the $31.00 level, stop loss at $37.00, and take profit at $25.00.
It is also reasonable to go for a 1:2 Risk/Reward down to $19.00 after moving your stop loss up to your entry price and taking half profits at 1:1 Risk/Reward.
Until then it's wise to remain on the sidelines and wait for the correct signals to enter the market.
💡 Trade Ideas 💡
Short Entry: $31.00
🟥 Stop Loss: $37.00
✅ Take Profit: $19.00
⚖️ Risk/Reward Ratio: 1:2
🔑 Key Takeaways 🔑
1. Bull Channel, Bias to Long!
2. Three Pushes up in Trend with Sell signal, Signal to Change Trend.
3. Gap to Second Push Support Line.
4. RSI at 82.00 and below Moving Average, Strong Bias to Short
5. Wait for Short Confirmation bar before entering a position.
💰 Trading Tip 💰
Probability that the price will go the direction of the trend is low at the beginning (swing trade) and end (late scalp) of a trend. Proportion your position size, risk (stop loss placement), and reward (take profit placement) to the probability of profit at your entry price.
⚠️ Risk Warning! ⚠️
Past performance is not necessarily indicative of future results. You are solely responsible for your trades. Trade at your own risk!
Like 👍 and comment if you found this analysis useful!
-Joe Dean
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