FTM broke out of its bull trend, failed to break above the Daily 30EMA and fell back down to $0.375. With Bitcoin and the rest of the crypto market following suit, are we ready to short?

How do we trade this? 🤔

Since my last FTM analysis, I provided this updated chart depicting what I believed was a likely outcome of the price action. A pullback from the downward momentum to the Daily 30EMA followed by a failure to break it:

FTM has begun to test the 30EMA and we have several data points that suggest a counter-trend trade is reasonable (probable); FTM has given us two legs down since breaking the bull trend, failed to break above the Daily 30EMA, RSI at 44.00 and below the moving average which gives FTM some room to fall.

If you're not already in a short, then we need to wait for another confirmation before a trade is justified. What we need is a final test and failure to break the Daily 30EMA around the price area of $0.40. From there, we can short half of our position to the low of the current candle ($0.375), take profits, move our stop loss up to our entry price, and then swing the rest of the position down to the Daily 200EMA support at $0.325.

Taking profits at the 200EMA is about a 1:1 Risk/Reward if our stop is placed just above the previous leg high at $0.445. That is a reasonable scalp, and the rest, being a bit lower probability of success, allows us to swing the second half of our position without the worry of losing money. We have to keep in mind that we're two legs into a micro bear trend after a three-legged bull run, this could be a two-leg trap. That's why we need confirmation below the Daily 30EMA to justify a short.

💡 Trade Idea 💡

Short Entry: $0.4175
🟥 Stop Loss: $0.4600
✅ Take Profit #1: $0.3750
✅ Take Profit #2: $0.3325
⚖️ Risk/Reward Ratio: 1:2

🔑 Key Takeaways 🔑

1. Two legs down since breaking the bull trend
2. Failed to break above the Daily 30EMA
3. 9th Daily Candle Just Closed Below 30EMA
4. RSI at 44.00 and below the moving average which gives FTM some room to fall.
5. Bitcoin Showing Strong Reversal Signals, Impacts Market Sentiment.

💰 Trading Tip 💰
It's reasonable to take half profits at the first support target in a short trade, or the first resistance target in a long trade. You can then move your stop loss up to your entry price and 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!

Find me at TradingView.com/u/TraderEngineering/

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