SEI → 400% Long in Under 2 Months! More to Come!? Let's Answer.
Updated
SEI has been one of the top movers in the crypto market in the last 30 days and by looking at this chart, you can see why. A 400% move to the upside in the last 47 days! Is there any more steam left on the train?
How do we trade this? 🤔
Strong push to the resistance line, looks to be the end of the second leg up, RSI is very high at 80.00 and above the Moving Average, we need to wait for a pullback. The crypto market is at a crucial point where a reversal is possible. We need to wait for a pullback on this chart to the channel support around $0.40 and get confirmation of a continuation with a buy signal.
At that time, it's reasonable to long for a third leg in the channel up to the $0.60 price area. It's also reasonable to take half profits at 1:1 for a third leg in a trend, then move the stop loss up to your entry price to secure profits. Your position size should also be smaller since we're later in the trend, the probability is now less that the trend will continue and your risk needs to be sized proportionally.
💡 Trade Idea 💡
Long Entry: $0.42
🟥 Stop Loss: $0.33
✅ Take Profit: $0.60
⚖️ Risk/Reward Ratio: 1:2
🔑 Key Takeaways 🔑
1. Bull Channel, Bias to Long.
2. Two Pushes Up, Looking for a Third.
3. Above Daily 30EMA, Bias to Long.
4. RSI at 80.00 and above Moving Average, Supports Pullback.
5. Look for Support at Previous Resistance, Look for 1:2 Long.
💰 Trading Tip 💰
The probability that the trend will continue weakens toward the end of it. Trends typically have three defined legs and while they can have more, it's reasonable to assume the probability of a continuation is lower at this stage. This means your position size should be lower to account for that decreased probability.
⚠️ 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? 🤔
Strong push to the resistance line, looks to be the end of the second leg up, RSI is very high at 80.00 and above the Moving Average, we need to wait for a pullback. The crypto market is at a crucial point where a reversal is possible. We need to wait for a pullback on this chart to the channel support around $0.40 and get confirmation of a continuation with a buy signal.
At that time, it's reasonable to long for a third leg in the channel up to the $0.60 price area. It's also reasonable to take half profits at 1:1 for a third leg in a trend, then move the stop loss up to your entry price to secure profits. Your position size should also be smaller since we're later in the trend, the probability is now less that the trend will continue and your risk needs to be sized proportionally.
💡 Trade Idea 💡
Long Entry: $0.42
🟥 Stop Loss: $0.33
✅ Take Profit: $0.60
⚖️ Risk/Reward Ratio: 1:2
🔑 Key Takeaways 🔑
1. Bull Channel, Bias to Long.
2. Two Pushes Up, Looking for a Third.
3. Above Daily 30EMA, Bias to Long.
4. RSI at 80.00 and above Moving Average, Supports Pullback.
5. Look for Support at Previous Resistance, Look for 1:2 Long.
💰 Trading Tip 💰
The probability that the trend will continue weakens toward the end of it. Trends typically have three defined legs and while they can have more, it's reasonable to assume the probability of a continuation is lower at this stage. This means your position size should be lower to account for that decreased probability.
⚠️ 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!
Trade active
SEI did not come back down to the previous resistance level, but rather broke out of the channel and found support at the previous channel resistance. The price now threatens to fall back into the channel, which is the more probable outcome given the three pushes up in the bull channel and the gap back down to Push #2 at $0.53.
Those data points along with the RSI being below the moving average around 47.00, gives us enough justification to short scalp this 4HR chart:
Short Entry: $0.67
🟥 Stop Loss: $0.78
✅ Take Profit: $0.56
⚖️ Risk/Reward Ratio: 1:1
This is a relatively high probability short but since the higher timeframes are not giving us a necessary level of reversal signals (Double Top Confirmation, Strong Bear Signal Bar), it's reasonable to use a smaller position size to your maximum risk allowed in this trade.
Trade closed: stop reached
SEI came down about 6% into our profit area, but found support at what is now the left shoulder level of a reverse head and shoulders pattern! I did not pull out of this trade early because I was playing the 1HR timeframe primarily and it was a very small position scalp on a highly volatile alt coin.
If I had been playing the 5m chart, there was a pattern and two candles that signaled a reversal, letting us know that it was time to end the trade:
We had a descending wedge with three pushes down, a bullish pattern, followed by a strong bull candle closing on its high. This is a textbook reversal signal. If that wasn't enough, the second leg up had a similar candle near our entry. That would have been an undeniable signal to end the trade and break even.
For more live trades, here are the others I am updating on my profile:
1. USDJPY is locked in profit after my first take profit was hit (120 pips of profit) with the second half of my trade currently 126 pips in the profit.
2. USDCAD is currently 49 pips in the profit, price action is printing nicely based on our analysis.
3. Just closed out of my IMX trade because of this alt market bull reversal. Ended with 6% in the profits with a position size double that of SEI. My USDCAD position is using the maximum position size allowed by my rules (2% of my equity) while USDJPY was a 1.5% trade.
-Joe Dean
Trader Engineering Course
**Available Now at TraderEngineering.com**
Trader Engineering Course
**Available Now at TraderEngineering.com**
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