CAKE → Three Pushes Up! Will We Reverse to $2.84? Let's Answer.
Updated
CAKE (Pancakeswap) completed its third push to the upside and rendered four Daily candles in a row with large wicks on the top. Today's close marks the fifth. Does that mean we're in for a drop?
How do we trade this? 🤔
I believe a pullback here is imminent. That doesn't mean a short is justified, we are in a bull trend and our bias should remain long. However, the short-term signals like the three legs, 5 wicks on top, and a high RSI all indicate a pullback is here.
It's reasonable to short this on a lower timeframe like the 1HR but on the Daily, we should be looking for a long. Wait for the price to come back down to the $2.84 area and find support. We need to see a strong buy signal and confirmation bar to justify an entry. I caveat this proposal with the state of the crypto market as a whole, it's a pivotal moment that could spell a reversal which will likely drag CAKE down with it.
In summary, zoom into the 1HR timeframe to find a short, wait for a long entry opportunity at $2.84 per my description above.
💡 Trade Idea💡
Long Entry: $2.937
🟥 Stop Loss: $2.64
✅ Take Profit: $3.53
⚖️ Risk/Reward Ratio: 1:2
🔑 Key Takeaways 🔑
1. Bull Channel with three pushes up, large wicks on third push.
2. Gap to Daily 30EMA.
3. Don't enter a trade here, need more price action.
4. RSI at 75.00 and above Moving Average. Supports Pullback.
5. Crypto Market at Pivotal Moment, Consider Reversal Possibility.
💰 Trading Tip 💰
You can trade any candle on the chart, the question is what trades are more worth your while and fit with your personality traits. First, understand how to analyze a chart, then understand yourself and how you best interact with your analysis such that you make money.
⚠️ 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? 🤔
I believe a pullback here is imminent. That doesn't mean a short is justified, we are in a bull trend and our bias should remain long. However, the short-term signals like the three legs, 5 wicks on top, and a high RSI all indicate a pullback is here.
It's reasonable to short this on a lower timeframe like the 1HR but on the Daily, we should be looking for a long. Wait for the price to come back down to the $2.84 area and find support. We need to see a strong buy signal and confirmation bar to justify an entry. I caveat this proposal with the state of the crypto market as a whole, it's a pivotal moment that could spell a reversal which will likely drag CAKE down with it.
In summary, zoom into the 1HR timeframe to find a short, wait for a long entry opportunity at $2.84 per my description above.
💡 Trade Idea💡
Long Entry: $2.937
🟥 Stop Loss: $2.64
✅ Take Profit: $3.53
⚖️ Risk/Reward Ratio: 1:2
🔑 Key Takeaways 🔑
1. Bull Channel with three pushes up, large wicks on third push.
2. Gap to Daily 30EMA.
3. Don't enter a trade here, need more price action.
4. RSI at 75.00 and above Moving Average. Supports Pullback.
5. Crypto Market at Pivotal Moment, Consider Reversal Possibility.
💰 Trading Tip 💰
You can trade any candle on the chart, the question is what trades are more worth your while and fit with your personality traits. First, understand how to analyze a chart, then understand yourself and how you best interact with your analysis such that you make money.
⚠️ 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!
Note
CAKE came down to the 2nd High Support as expected, but we are not seeing signs of bull strength at this level. Such bull strength was required for the original long position in this analysis to be justified, but now we find ourselves looking for a short entry.
The last Daily bar to close on this chart closed below the 30EMA. It's reasonable to short scalp this now, but if we want to add some additional probability, I would wait for another test of the 30EMA and then play the rejection to the downside.
1. We have three pushes up in a bull channel
2. Several failed attempts to break the $3.80 price area
3. A massive 30% sell-off after that failure
4. An RSI below the moving average.
One counter-point to add, the Daily RSI has a gap and a pullback toward the upside or at least, sideways price action is likely before we get a drop.
Bitcoin is at a key resistance level and per my lifetime analysis here, I think the crypto market is going to pullback significantly before we see new all-time highs:
-Joe Dean
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