CAKE → Strong Support at $2.14! Nearing Resistance and Drop?CAKE had a fantastic bounce off of the $2.14 support area and ripped to $2.92! We're close to the next resistance area of $3.135, what does that mean for our trade opportunities?
How do we trade this? 🤔
We're too close to major resistance to long on this timeframe (or any timeframe for that matter), we need to wait for either a break of that resistance level, or a break downward and rested the previous high price of $2.84. For this short setup to work, we need a strong sell response around the $3.135 area, breaking the price downward back into the $2.65 range. The price should either go sideways or re-test the previous high of 2.84 and fail. That failure will be depicted by a strong bear candle closing on or near its low. This will be our justification to enter a short position.
Take profits before we get near the Support Zone at a 1:2 Risk/Reward Ratio, around the $2.29 area with our protective stop above the previous high price around $2.90.
Wait for this pattern to play out, it's never wise to enter before we have sufficient evidence. That evidence gives us a higher probability that the price will behave in the way our analyses show us. Anything else is gambling!
💡 Trade Ideas 💡
Short Entry: $2.71
🟥 Stop Loss: $2.92
✅ Take Profit: $2.29
⚖️ Risk/Reward Ratio: 1:2
🔑 Key Takeaways 🔑
1. Established Strong Support at $2.14 Area, Bias to Long.
2. Look for Resistance at $3.135
3. Look for Reversal Trade Short, Strong Sell and Confirmation Candle.
4. Do not Long Here, Close to Support.
5. RSI at 70.00, above Moving Average. Supports Upcoming Resistance.
💰 Trading Tip 💰
Probability on the chart changes with every candle. The goal of an analysis is to illuminate the current trends, patterns, and candlestick behavior to determine the probability that the next candles will continue the trend. We can then draw trade ideas and determine good entries, followed by proper trade management if the chart doesn't pan out according to our analysis.
⚠️ 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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