OP → Optimism 200% Bull Run! About to Reverse? Let's Answer.Optimism had a 200% bull run from November 9th to December 27th. With three legs up, and multiple failed attempts to break $4.20, are we due for a reversal to the downside?
How do we trade this? 🤔
Short answer, no. We don't have enough data to enter a short because we're lacking confirmation. Three pushes in a trend is an indicator that we need to start looking for signs of a trend change, the failed attempts to break $4.20 is another great reversal example, the RSI falling around 61.00 and below the moving average is the cherry on top. However, we're still above the 30EMA going sideways and there are no laws saying we can't have a 4th leg up.
We likely need to go sideways for a while and retest $4.20. It's almost important to watch Bitcoin as a market indicator and see how it responds to the recent sell-off from the measured move top. Bitcoin could make a run to $50,000 which surely could take Optimism with it for a 4th leg. If Bitcoin falls and starts its pullback, we should have a shot to short scalp OP.
For now, wait on the sidelines for the price action to deliver the required behavior. Until then, you'll be much wealthier waiting on the sidelines!
💡 Trade Idea 💡
Short Entry: $3.60
🟥 Stop Loss: $4.34
✅ Take Profit: $2.50
⚖️ Risk/Reward Ratio: 1:1.5
🔑 Key Takeaways 🔑
1. Three Pushes up in a Bull Channel.
2. Potential Double Top at Resistance Zone
3. Gap to 30EMA and Support Zone
4. Enter 1:1.5 Short Scalp with Confirmation
5. RSI at 61.00 and below Moving Average. Bias to Short.
💰 Trading Tip 💰
The RSI on its own is a weak datapoint to make a trade decision. But when used as a supplement to key price action analysis, can be a fantastic orientation check on the state of the market.
⚠️ 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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