JoshThomas04
Long

OMG - A Wedge Breakout Setup!

BITFINEX:OMGUSD   OmiseGo / Dollar
Welcome to my OMG trading idea/guide to crushing it!!

As with everything else in the crypto space, we have been pulling back from our recent surge. OMG outperformed a lot the other major coins during this surge, rising just over 46% from the bottom!!! Hats off to OMG. If this is the wave 1 then can OMG assure us more gains in the next wave up? Potentially. I know some people would say this coin is undervalued compared to the other major coins out there but we aren’t here to discuss that. We are here to trade like a boss. This 46% surge shows the strength of this market and we need to capitalise on it.

The surge topped at the resistance level shown on the chart which has been an action area for OMG. On the pullback, we have formed a descending wedge which has fallen nicely onto the dashed line which previously acted as resistance. Breakouts from formations like this can be very profitable so I’m going to talk you through how to trade them. Hopefully it doesn’t break out before you read it!!!! Also, I will be trading this as I’m laying it out to you now.

Breakouts are one of traders most favourite types of trade as it can offer a trader a high probability trade as we have clear defined stop levels and targets. Breakouts happen in a patterns like this where price contracts towards an apex and are usually broken out with high volume . The trick with trading these setups is getting as close to the breakout without getting caught by fakeouts. I usually find placing buy-limit orders just outside the formation the best way to get in the market so we don’t have to depend on our agility to get in at the right price, it will be done automatically. In this case, I would place my buy-limit at $11.25. Our target can be calculated by the height of the wedge . As the resistance is just before this target, I will be using resistance as my target at $12.45 (10.7%). Not all traders use stops however this is a sure way to get us out of the market if it isn’t acting how we are expecting it to. I would place my stop just inside the formation at $10.87 (3.4%). If we re-enter this area then we are back to square one and we have to find another entry. So here we have around 1:3 risk to reward ratio which is perfect for me. I am happy to enter this trade knowing I won’t get burnt if it doesn’t work out.

A point that is worth mentioning - as we expect high volume on the breakout, our trades should be profitable as soon as they are executed. If price hesitates after your order is placed then it could be a sign that it is a false breakout. When this happens it is ok to step out of the trade and work on another one. The frustration it causes isn’t worth keeping it there just to see is drop down to your stop loss. You want to be in control at all times.

Thank you for taking you time to read this! Please feel free to comment or ask questions. If you feel like this added value to you then please give it a like/give me a follow!

You can follow me through this link -> https://www.tradingview.com/u/JoshThomas...
Trade active: TRADE IS ACTIVE!!!!

This is the great thing about breakout trading. Now we have broken above the pattern and entered our order, we can raise the stop loss to our entry point. The breakout took us to $11.55 and we have entered an ascending triangle continuation pattern. A breakdown from here and it looks like we had a fakeout from the descending wedge.

Good luck trading guys.

Comment: Now, we have been stopped out of this trade and not long after it's bounced back up. So what do we do now?

Well, firstly I'd like to mention we haven't lost any money from this trade. The market showed indecisiveness and we wasn't in control of our trade so we decided it was best we wait until the market shows it's hand.

So now we are approaching a resistance line. We can decide to enter back here but it's important to plan it out first. Don't just jump back in because of FOMO.

Order cancelled
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