AVAX → Avalanche Falls to $30! Heading Back to $50?
Updated
AVAX landed just north of our final take profit target of $30 from my last analysis, a perfect drop and profit after three pushes up in a bull trend. Avalanche has been sideways since, are we ready to go back up?
How do we trade this? 🤔
We had three pushes up in a bull trend; the third push made contact with a major 2021 resistance area, followed by two strong bear candles closing on their lows below the Daily 30EMA. We tested the 30EMA as resistance followed by a strong bear bar closing on or near its low on April 9th. That was our confirmation to enter the short down to $27, we took profits just north of $30 where the run ended. This completed a two-legged pullback, which is a signal that the price may want to re-test $50 and beyond.
We've had several attempts to break that low since and found ourselves in a nice trading range. The longer a trading range continues, the greater the chance the price will reverse direction from the price action to the left of the range. With Bitcoin in a nice pullback and seeming to want another run for $74,000, AVAX is likely to follow toward the upside. Wait for a strong bull candle to close on or near its high at this level, then enter a 1:2 Risk/Reward trade, taking half profits at 1:1 R/R ($42.000). Move the stop loss up to the entry price and swing the latter half of the position to $49.00, just before the left resistance area.
💡 Trade Idea 💡
Long Entry: $35.00
🟥 Stop Loss: $28.00
✅ Take Profit #1: $42.00
✅ Take Profit #2: $49.00
⚖️ Risk/Reward Ratio: 1:2
🔑 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. Two-legged pullback from bull run, price has run sideways for an extended time, look for long entry.
5. RSI at 40.00 and on the Moving Average, supports long 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!
Like 👍 and Follow to learn more about:
1. Reading Price Action
2. Chart Analysis
3. Trade Management
4. Trading Psychology
How do we trade this? 🤔
We had three pushes up in a bull trend; the third push made contact with a major 2021 resistance area, followed by two strong bear candles closing on their lows below the Daily 30EMA. We tested the 30EMA as resistance followed by a strong bear bar closing on or near its low on April 9th. That was our confirmation to enter the short down to $27, we took profits just north of $30 where the run ended. This completed a two-legged pullback, which is a signal that the price may want to re-test $50 and beyond.
We've had several attempts to break that low since and found ourselves in a nice trading range. The longer a trading range continues, the greater the chance the price will reverse direction from the price action to the left of the range. With Bitcoin in a nice pullback and seeming to want another run for $74,000, AVAX is likely to follow toward the upside. Wait for a strong bull candle to close on or near its high at this level, then enter a 1:2 Risk/Reward trade, taking half profits at 1:1 R/R ($42.000). Move the stop loss up to the entry price and swing the latter half of the position to $49.00, just before the left resistance area.
💡 Trade Idea 💡
Long Entry: $35.00
🟥 Stop Loss: $28.00
✅ Take Profit #1: $42.00
✅ Take Profit #2: $49.00
⚖️ Risk/Reward Ratio: 1:2
🔑 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. Two-legged pullback from bull run, price has run sideways for an extended time, look for long entry.
5. RSI at 40.00 and on the Moving Average, supports long 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!
Like 👍 and Follow to learn more about:
1. Reading Price Action
2. Chart Analysis
3. Trade Management
4. Trading Psychology
Note
AVAX closed a perfect strong bull candle on it's high just below the Daily 30EMA just after this analysis was posted. That validated our premises and was the signal enter a long trade. The price is just below $37.00 now and if today's bull candle closes on its high, expect more upside to our first take profit target of $42.00, where we lock in profits by moving our stop loss up to our entry price of $35.00.
Note
The bull candle closed above the Daily 30EMA! Not quite as strong as one could hope for, a bit larger and closing closer to the high would have been preferred. None the less, the follow-on candle is pending and will close later today. We need to see another new high, above $38. $40 is the next resistance and if that breaks, our $42 Take Profit #1 will be hit and profits locked into the trade.
-Joe Dean
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