AVAX → Avalanche At Resistance! Reversal Time? Let's Answer.Avalanche had one more nudge toward the 2021/2022 resistance level since my last analysis, creating a bearish divergence and setting us up for a short trade. Should we short now?
How do we trade this? 🤔
As stated in my last analysis and this one, we need a short signal and confirmation for justification to short AVAX. Our proposed third push up from the previous analysis never rendered a sell signal and has now created a bearish divergence with the RSI. This means the price had a higher high and the RSI a lower high, signaling weakening bulls.
This does *not* mean we enter a short now, it's too risky without more price action. We need a strong sell signal and preferably, a break below the channel support and a re-test for resistance. Then short down to the Daily 200EMA at a 1:2 Risk Reward Ratio. It's also reasonable to take half profits at a 1:1 Risk Reward (around $28.00) and swing the remainder at a 1:3 risk reward or until a reversal signal shows itself.
💡 Trade Idea 💡
Short Entry: $34.00
🟥 Stop Loss: $25.00
✅ Take Profit: $40.00
⚖️ Risk/Reward Ratio: 1:2
🔑 Key Takeaways 🔑
1. Bull Channel, Bias to Long!
2. Three Pushes up in Trend with Sell signal, Signal to Change Trend.
3. Gap to Second Push Support Line.
4. RSI at 63.00 and below Moving Average, Divergence.
5. Wait for Short Confirmation bar before entering a position.
💰 Trading Tip 💰
Divergences between price action and the RSI are not strong signals on their own. Combined with three pushes up in a trend, a major resistance area, and a sell signal, renders a higher probability of profit for reversal trading.
⚠️ Risk Warning! ⚠️
Past performance is not necessarily indicative of future results. You are solely responsible for your trades. Trade at your own risk!
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Avaxshortsetup
AVAX → Avalanche Reversal Imminent!? The Tipping Point is Near.Avalanche (AVAX) is burning red hot on the charts and flirting with the idea of a reversal. Do we have the justification to short here? Or will the trend continue upward?
How do we trade this? 🤔
AVAX has three pushes up in this trend, three sell bars near the $44.00 level, and an RSI level of 82.00 and below the Moving Average. These are all signs that a trend change is coming in the near future and at the very least, entering a long position here is not justified.
It is reasonable however to capture some of the downward price action with the correct indicators. We need break below the bull channel support around the Daily 30EMA with a strong bear bar closing on or near its low. Followed by a retest of the channel support as resistance to confirm that the bull trend is over. At this time, its reasonable to scalp a short at 1:1 Risk/Reward around the $31.00 level, stop loss at $37.00, and take profit at $25.00.
It is also reasonable to go for a 1:2 Risk/Reward down to $19.00 after moving your stop loss up to your entry price and taking half profits at 1:1 Risk/Reward.
Until then it's wise to remain on the sidelines and wait for the correct signals to enter the market.
💡 Trade Ideas 💡
Short Entry: $31.00
🟥 Stop Loss: $37.00
✅ Take Profit: $19.00
⚖️ Risk/Reward Ratio: 1:2
🔑 Key Takeaways 🔑
1. Bull Channel, Bias to Long!
2. Three Pushes up in Trend with Sell signal, Signal to Change Trend.
3. Gap to Second Push Support Line.
4. RSI at 82.00 and below Moving Average, Strong Bias to Short
5. Wait for Short Confirmation bar before entering a position.
💰 Trading Tip 💰
Probability that the price will go the direction of the trend is low at the beginning (swing trade) and end (late scalp) of a trend. Proportion your position size, risk (stop loss placement), and reward (take profit placement) to the probability of profit at your entry price.
⚠️ Risk Warning! ⚠️
Past performance is not necessarily indicative of future results. You are solely responsible for your trades. Trade at your own risk!
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AVAX → Avalanche About to Reverse!? Or Continue to the Upside?Avalanche has been roaring through a nice curving bull channel until the top of the third push at $42.75! A nice sell signal formed on yesterdays daily candle, now we need to see how today closes to make our next move.
How do we trade this? 🤔
Avalanche had its third push up in the bull channel, a typical number of legs before the trend changes into a trading range or reverses. Given Bitcoins recent sell-off at a key resistance level, I believe it will drag AVAX down with it. AVAX has a sell signal on yesterdays candle and if today closes with a strong bear candle, we're likely looking at putting in some more lows. The RSI is also over 75.00 and below the moving average, all supporting at least a short-term bearish sentiment.
We need follow-through! Yesterdays signal is not enough justification to enter a short. It's best to wait for the price to fall to the 30EMA and see what happens there. If we get a bounce then another rejection to the downside, we'll have a head and shoulders reversal pattern on our hands at which time, a short will be justified.
💡 Trade Idea 💡
Short Entry: $26.00
🟥 Stop Loss: $32.00
✅ Take Profit: $14.00
⚖️ Risk/Reward Ratio: 1:2
🔑 Key Takeaways 🔑
1. Bull Channel, Bias to Long!
2. Three Pushes up in Trend with Sell signal, Signal to Change Trend.
3. Gap to Second Push Support Line.
4. RSI at 75.00 and below Moving Average, Bias to Short
5. Wait for Short Confirmation at potential Right Shoulder.
⚠️ 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!