ADA → Cardano Threatening to Fall to Support. Should We Short?

ADA closed the large bull gap from our previous analysis and found support at the large bull candle open. We did not get a higher high and Bitcoin is showing signs of a pullback. Should we short here?

How do we trade this? 🤔

ADA → Cardano Threatening to Fall to Support. Should We Short?

We should not short ADA on the Daily timeframe. The time to short was after the double top reversal near the $0.60 price range, we're too far away from the proper stop loss placement relative to Support Zone #1. You can find short trades on the 1HR timeframe or lower but for the Daily/4HR timeframe, we need to look for long entries.

We can wait for a bounce on Support Zone #1 to enter a long, but the crypto market may be looking at a more significant pullback. It's difficult to tell how the alt coin market will react to say, a 30% Bitcoin pullback. The point is, don't think that Support Zone #2 isn't a probable target. Either zone is reasonably to long, but we need to wait for the buy signal and confirmation bars before entering. A good buy signal is one with a long wick on the bottom at least 1/3 the size of the body closing on or near its high. A confirmation candle will be a strong bull candle closing on or near its low following the buy signal buy 1 to a few bars.

Until then, it's best to trade a different currency pair and wait for a good long opportunity here on ADA.

💡 Trade Idea 💡

Long Entry: $0.4210
🟥 Stop Loss: $0.3734
✅ Take Profit #1: $0.4690
✅ Take Profit #2: $0.5640
⚖️ Risk/Reward Ratio: 1:3

🔑 Key Takeaways 🔑

1. Large Bull Bar Gap Closed.
2. Strong Support on the Daily 30EMA.
3. Lower High after the 30EMA bounce.
4. Bad Risk/Reward Ratio for a short, wait for a long setup at Support Zone #1 or Support Zone #2
5. Bitcoin Showing Strong Reversal Signals, Impacts Market Sentiment.

💰 Trading Tip 💰
It's reasonable to take half profits at the first resistance target in a long trade, or the first support target in a short trade. Using a 1:1 Risk/Reward Ratio for your first target, you can move your stop loss up to your entry price, locking in profits. This allows you to watch the rest of the trade execute without worry of losing money. This helps improve trading psychology and the equity in your account.

⚠️ 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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