BNX Breakdown: The Next Trade SetupBNX has recently been testing a key resistance zone around the $1 level. After hitting the 0.618 Fibonacci retracement at $1.10, the market shifted into a downtrend. Let's analyse where our next trade opportunity might arise.
Market Structure & Confluence Zones
$1 to $1.1: BNX encountered robust resistance between $1 and $1.1, where the 0.618 Fib retracement aligns perfectly with the fib speed fan (0.618-0.65). Additionally, the anchored VWAP taken from the high at $1.1 aligns beautifully with the $1 mark, adding another robust layer of resistance. This convergence reinforces the strength of this zone and signals potential continuation of the downtrend.
Recent price action shows that BNX has repeatedly bounced off the 0.618/0.666 levels during small downward corrections.
Moving Averages on the 1-Hour Chart: The 21 EMA/SMA on the 1-hour timeframe is clustering between $0.97 and $1, providing additional confirmation of the resistance and offering an ideal entry region for short trades.
Primary Short Trade Setup
Given the multiple confluences around the resistance zone, our main focus is a short trade with a well-defined laddering strategy:
Entry Strategy (Laddering): Initiate short positions with staggered entries between $0.97 and $1.019. This dollar-cost averaging (DCA) approach allows for flexibility and optimises your entry as price tests the resistance zone.
Stop Loss (SL): Place your stop loss around $1.0375, just above the Point of Control (POC) or the previous high in this range to effectively manage risk.
Target: Aim for a profit target at $0.8. This target is supported by multiple technical indicators.
Risk/Reward Ratio: With these levels, you are looking at an approximate risk/reward ratio of 4:1 or better, depending on your specific DCA weighting.
Confirmation: As always, await confirmation through order flow analysis and the appearance of rejection candles at key levels before entering the trade.
