OM's Meteoric Rise: Time to Buy the Dip or Short the Top?

OM has been on an astronomical journey, soaring from $0.0173 on 12 October 2023 to an all-time high of $6.485 on 7 February 2025 – a jaw-dropping +37,494% increase in just 484 days. Currently ranked 26 with a market cap of 5.5B, OM’s meteoric rise has everyone asking: Is OM topping out, or is there still more upside? Could a significant correction be on the horizon? Let’s dive into the technicals and explore our trade setups with high conviction, backed by a wealth of confluence.

Market Structure & Historical Context

Between mid-November 2024 and the end of January 2025, OM traded within a 70-day range, oscillating between $4.4 and $3.3. The Point of Control (POC) for this range is around $3.87, marking a critical level where price action has repeatedly converged. This trading range provides the backdrop for our analysis, highlighting both key support and potential resistance zones that may dictate OM's next move.

Key Support Zones & Confluence

A multitude of technical indicators converge around the $3.87 level, making it a crucial support area:

1.) Fibonacci Retracement Confluence:

Taking the Fibonacci retracement from the low at $3.173 (25 January 2025) to the recent high, the 0.786 retracement level lands at $3.8818—just a hair above our POC.

2.) Channel Median Line:

The median line drawn through the highs and lows of the 70-day trading range reinforces the significance of this area.

3.) Moving Averages:

The weekly 21 EMA/SMA currently sits between $3.63 and $3.31, and as they trend higher, we can expect them to approach $3.9 in the coming week, offering additional support.

4.) Trend Indicator (Beta):

On the 4-hour timeframe, my new upcoming Trend Indicator highlights bullish momentum edging around $3.75, further consolidating support.

5.) Fibonacci Extension:

The 1.271 Fibonacci extension from the previous low at $4.4 places a key level at $3.8329, adding yet another layer of confluence.

Collectively, these factors create a robust support zone, suggesting that any retracement towards this level might serve as an attractive entry point for long positions.

Resistance Levels & Trade Setups

Resistance Analysis
OM has repeatedly faced strong resistance near the $6 mark:

Rejection Patterns:

The chart reveals multiple rejections around $6, with a notable Swing Failure Pattern (SFP) at $6.295 that confirmed bearish pressure.

Short Trade Opportunity:

Previously, the rejection at $6.295 offered a low-risk short trade: risking about 3% for a potential gain of 17% to the Fibonacci retracement level of 0.618 (approximately $5.1965), which was nearly reached.

Potential Trade Setups

Short Trade Setup

With OM encountering strong resistance around $6 and historical rejections at key levels, a breakdown could spark further downward movement.

Entry & Stop Loss:

Entry: Initiate a short position if price fails to break decisively above $6.
Stop Loss: Set a 5% stop loss above the previous SFP.

Targets & Risk/Reward:

Targets: Consider targets at $4.7 (yielding approximately +22%) or $4.0 (around +34%).
Risk/Reward: This setup offers an impressive risk/reward ratio of 4:1 to 6:1.

Long Trade Setup

The multiple layers of support around $3.87 present an attractive opportunity for long entries should the price retrace, despite the overall bullish structure. Historically, OM has bounced off its 21 daily EMA/SMA, as marked by previous green box zones on the chart.

Entry Strategy & Laddering:

Entry: Look for long entries if price pulls back to the support zone.
Laddered Positions: Consider scaling in with positions between $4 and $3.75. This dollar-cost averaging (DCA) approach will help optimise your entry over the pullback.

Stop Loss & Target:

Stop Loss (SL): Set your stop loss below $3.58 to account for volatility while protecting against a breakdown.
Take Profit: Target the $4.5 level as your primary take profit.

Risk/Reward:

With laddered entries between $4 and $3.75, this setup provides an approximate risk/reward ratio of 2:1, though the exact ratio will depend on your specific DCA entry points.

Final Thoughts

Only execute shorts with clear confirmation from order flow analysis.
Conversely, a pullback towards the support zone presents an appealing long opportunity for those confident in OM’s enduring momentum.

As always, it’s essential to monitor price action closely and adjust your strategy as new data unfolds.

Okay. Wrapping up this analysis. Wishing you all profitable and successful trades! =)

Trade closed manually

Had to close the trade manually, as bulls took over, bouncing off the daily 21 EMA.

SiDec

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SiDec