ADA → Cardano Pullback Followed by New Highs? Let's Answer.ADA completed its measured move to $0.68 and has now completed two legs down in a pullback to Support Zone #1. Should we long here?
How do we trade this? 🤔
Support Zone #1 has held through two failed attempts to break down. We have a strong bull bar leading into the Daily 30EMA where we are now seeing some resistance. The RSI is around 50 and above the Moving Average, another sign for a long position. The only thing we're missing is a solid Risk/Reward Ratio, which requires the price pullback a bit more before we can enter the market.
We ought to target at least a 1:2 Risk/Reward, but I believe we have the runway for a 1:3 Risk/Reward given the distance to the previous high of $0.68. Target the $0.487 area for an entry and place a stop loss below Support Zone #1 around $0.44, the first Take Profit at $0.535, and the final Take Profit around $0.63 or until you see a sell signal. Move the stop loss up to the entry price when Take Profit #1 is hit to lock in profits.
💡 Trade Idea 💡
Long Entry: $0.4875
🟥 Stop Loss: $0.440
✅ Take Profit #1: $0.535
✅ Take Profit #2: $0.630
⚖️ Risk/Reward Ratio: 1:3
🔑 Key Takeaways 🔑
1. Two-legged pullback after a bull run
2. Two failed attempts to break Support Zone #1
3. Strong bull bar after pullback into the Daily 30EMA
4. Wait for the price to pullback to the $0.487 area for an entry
5. RSI at 50.00 and above the moving average, supports long bias.
💰 Trading Tip 💰
Trends typically have 3 pushes in either direction before a trend change begins. Along with other market indicators, creates a situation to look for counter-trend trades because the probability of profit is high enough.
⚠️ 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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