MATIC → Polygon Showing Reversal Signals? A Short Scalp is Near!
Updated
MATIC (Polygon) is holding above the Daily 200EMA support and has yet to break it after making contact 5 times since breaking it. So why is a short scalp reasonable?
How do we trade this? 🤔
We have a few good reasons to be looking for a counter-trend trade; There have been several sell-offs in the $0.95-$1.10 range, a very strong sell-off at $1.10, the 200EMA support has been tested 5 times which adds to the probability it will be broken, and the RSI is at 50.00 and below the moving average.
These data points tell us it's time to start looking for counter-trend setups, but we cannot enter a trade until we see confirmation to enter. What we need is a final test of the $0.98 area to get a good entry around $0.93-$0.95. From there, we can short half of our position to the 200EMA ($0.79), take profits, move our stop loss up to our entry price, and then swing the rest of the position down to the Support Zone at $0.665.
Taking profits at the 200EMA is about a 1:1 Risk/Reward if our stop is placed just above the previous high at $1.11. That is a reasonable scalp, and the rest, being a bit lower probability of success, allows us to swing the second half of our position without the worry of losing money. We could repeat this approach until either the 200EMA Support breaks or the $1.10 high breaks and stops us out, which lets us know the upward momentum isn't done yet.
💡 Trade Idea 💡
Short Entry: $0.95
🟥 Stop Loss: $1.11
✅ Take Profit #1: $0.79
✅ Take Profit #2: $0.67
⚖️ Risk/Reward Ratio: 1:1.75
🔑 Key Takeaways 🔑
1. Several Sell Signals at Key Resistance area of $0.95 to $1.10
2. Strong Sell Signal After Hitting $1.10
3. Wait for One More Failed Attempt to break $0.95
4. Short a Sell Signal off of $0.95-$1.00 Price Area, Stop Loss above Previous High of
5. RSI at 50.00 and below Moving Average.
💰 Trading Tip 💰
It's reasonable to take half profits at the first support target in a short trade, or the first resistance target in a long trade. You can then move your stop loss up to your entry price and 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. Trade psychology
How do we trade this? 🤔
We have a few good reasons to be looking for a counter-trend trade; There have been several sell-offs in the $0.95-$1.10 range, a very strong sell-off at $1.10, the 200EMA support has been tested 5 times which adds to the probability it will be broken, and the RSI is at 50.00 and below the moving average.
These data points tell us it's time to start looking for counter-trend setups, but we cannot enter a trade until we see confirmation to enter. What we need is a final test of the $0.98 area to get a good entry around $0.93-$0.95. From there, we can short half of our position to the 200EMA ($0.79), take profits, move our stop loss up to our entry price, and then swing the rest of the position down to the Support Zone at $0.665.
Taking profits at the 200EMA is about a 1:1 Risk/Reward if our stop is placed just above the previous high at $1.11. That is a reasonable scalp, and the rest, being a bit lower probability of success, allows us to swing the second half of our position without the worry of losing money. We could repeat this approach until either the 200EMA Support breaks or the $1.10 high breaks and stops us out, which lets us know the upward momentum isn't done yet.
💡 Trade Idea 💡
Short Entry: $0.95
🟥 Stop Loss: $1.11
✅ Take Profit #1: $0.79
✅ Take Profit #2: $0.67
⚖️ Risk/Reward Ratio: 1:1.75
🔑 Key Takeaways 🔑
1. Several Sell Signals at Key Resistance area of $0.95 to $1.10
2. Strong Sell Signal After Hitting $1.10
3. Wait for One More Failed Attempt to break $0.95
4. Short a Sell Signal off of $0.95-$1.00 Price Area, Stop Loss above Previous High of
5. RSI at 50.00 and below Moving Average.
💰 Trading Tip 💰
It's reasonable to take half profits at the first support target in a short trade, or the first resistance target in a long trade. You can then move your stop loss up to your entry price and 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. Trade psychology
Note
MATIC gave us our confirmation on January 14th. Unlike the depiction in my analysis, the price ended up falling straight down to the 200EMA rather than attempt the Left Shoulder Resistance first. If you took the short on the 14th, it's reasonable to take half profits here at the Daily 200EMA and swing the rest to lower levels. It's ideal to move your stop loss up to your entry price to lock in those profits.
Let's see if we get any support here at the 200EMA!
-Joe Dean
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