LINK Weekly Analysis - Are we about to Reverse to the Downside?
Chainlink had a fantastic breakout of the Weekly 200EMA closing two weekly candles above it. We're about to close a third bullish weekly candle in a row, so should we long at this level? Not so fast!
As a trend continues your probability of profit increases in that direction, but that's in exchange for greater risk because your stop loss must be placed under the bull bars. Eventually, that formula is no longer sustainable because more traders stop entering as the risk grows and the trend reverses.
In this case, a tight stop placement would be at $7.00, and a riskier but still reasonable stop placement would be at $9.00 just below the 200EMA. The current price is almost at $16.00, longing here would give you at best a 2:1 Risk/Reward Ratio, which is a fine scalp but given the following key points, I would wait.
Key Points
1. Strong bounce off of Weekly Support led to a bull breakout!
2. Price is in contact with a Weekly Resistance Zone
3. Bitcoin as a leading indicator, has not confirmed its breakout of Weekly Resistance
4. RSI is overbought. Wait for a pullback to enter Long.
I believe we need more price action before we can long, but I would also not short until we see a reversal bar closing on or near its low.
You are solely responsible for your trades, trade at your own risk!
Let us know what you think in the comment section below!
As a trend continues your probability of profit increases in that direction, but that's in exchange for greater risk because your stop loss must be placed under the bull bars. Eventually, that formula is no longer sustainable because more traders stop entering as the risk grows and the trend reverses.
In this case, a tight stop placement would be at $7.00, and a riskier but still reasonable stop placement would be at $9.00 just below the 200EMA. The current price is almost at $16.00, longing here would give you at best a 2:1 Risk/Reward Ratio, which is a fine scalp but given the following key points, I would wait.
Key Points
1. Strong bounce off of Weekly Support led to a bull breakout!
2. Price is in contact with a Weekly Resistance Zone
3. Bitcoin as a leading indicator, has not confirmed its breakout of Weekly Resistance
4. RSI is overbought. Wait for a pullback to enter Long.
I believe we need more price action before we can long, but I would also not short until we see a reversal bar closing on or near its low.
You are solely responsible for your trades, trade at your own risk!
Let us know what you think in the comment section below!
-Joe Dean
Trader Engineering Course
**Available Now at TraderEngineering.com**
Trader Engineering Course
**Available Now at TraderEngineering.com**
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.