LINK → Chainlink Dropping from Double Top? Going Down to $10?

LINK completed a measured move and attempted to break past the Resistance Zone twice without success. Does that mean we have justification to short?


How do we trade this? 🤔

LINK → Chainlink Dropping from Double Top? Going Down to $10?

A low probability, low risk, high reward trade (a reversal) was reasonable after the Daily candle closed on December 15th. That was a strong bear bar closing on its low after the double top, now we're stuck under the 30EMA and having a hard time getting back up.

You can also reasonably short here at a 1:1 Risk Reward Ratio. Your position size should be smaller since we're further away from the justified stop loss position above the Resistance Zone. Shorting to the Daily 200EMA support is a solid target but remember, this is technically a counter-trend trade, so we need to watch every candle for a sign that we're bouncing back toward the upside.


💡 Trade Ideas 💡

Short Entry: $14.150
🟥 Stop Loss: $17.650
✅ Take Profit: $10.650
⚖️ Risk/Reward Ratio: 1:1


🔑 Key Takeaways 🔑

1. Measured Move Complete, Potential Double-Top Reversal.
2. Price fell from Resistance Zone. Reasonable to Short Scalp.
3. Teacup and Handle Pattern did not play out.
4. Far away from Reasonable Protective Stop, Small Position.
5. RSI at 45.00 and below the Moving Average. Bias to Short.


💰 Trading Tip 💰
Your position size should be proportional to your risk and relative to your maximum allowed loss on a single trade.


Example: A $100 trading account using the 1% rule should lose no more than $1 on a single trade. That means if your stop loss is further away, your position size needs to be sized so that your loss equals no more than $1.


⚠️ 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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