Long

EOS/USD Breakout. The best risk defined setup of 2021.

Updated

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In a previous idea I was asked if I could explain my procedure to enter a trade and that I will try to do here.

I had an earlier idea about this triangle formation that got deleted, but after months of waiting, I can begin to say that the breakout is here and it came just as planned.

🟠 ENTRY
We're looking for a daily close above trendline and then a following retest for confirmation of resistenace turned to support to enter. anything arround $3.35 would be perfect to me, but the upside is so masive that it doesn´t really matter much. Even when trading breakouts, a risk defined setup is very important, and therefore, I will use a stop loss in the invalidation zone (where the trade is no longer valid) and a series of take profits in trouble areas (mainly zones where a reversal might ocurr).

🟠 STOP LOSS
Conversly, the best place for SL is below the lowest swing arround $ 2.87 before breakout.

🟠 TAKE PROFIT
Take profits are split into three:
1. Surround the previous swing high (daily close). $ 8.47
2. Arround the all time high highest daily close. $ 17.64
1. At the top of the channel of current daily bar. (Assuming cyclical repetition)

🟠POSITION SIZE
Position size depends a lot on the trader, but in my case I assign a risk percentage of my portfolio to every trade, meaning that if my portfolio is $100, and my risk tolerance is 5%, I will allocate $5 of risk to the trade. THIS IS NOT POSITION SIZE. Position Size is calculated by dividing the risk ammount ($ 5) by the distance in percentage to the stop loss from the entry.
Let's say I buy at $ 3.35 and my risk ammount is $ 5 and my stop loss is $ 2.87, that is, -14.4% below.
POSITION SIZE = (RISK AMMOUNT) / (DISTANCE TO STOP LOSS)
POSITION SIZE = ($ 5) / (0.144) = $ 34.7

I´ll keep you updated on this trade.
** This is not financial advice, trade at your own risk **

Trade active

As ETH progresively reaches ATH, it looses -7% which then leads EOS to drop by -12%. This is sort of the retracement we where looking for and that is why im buying 33% of my position.

Note

The day is today. Not only are we experiencing a breakout from the long-term triangle formation, but also a breakout from the horizontal resistance at $3.85 that may now (hopefully) act as support for continuation towards the established take profits.

My risk management will allow to increase my position only after there are several daily closes above this level, especially if there is a sign of rejection now from the upside.
Good luck to you all and trade well. :)

Note

Not only has EOS grown 490% in 2021 as shown in the graph, but it has also outperformed BTC by 160%, which was king of my goal with this insane risk to reward ratio swing trade.

Thanks for all the engagement and diffussion this analysis has gotten!

JRuiz000

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