Summary of Previous Analysis
The original short trade idea was based on a failed breakout attempt above the $2,275 resistance, leading to a short entry around $2,233, with a stop loss at $2,320.5 and a target near the trendline at $2,135. The rationale for the trade was the concentration of volume in the $2,150-$2,275 range and the expectation of a pullback due to the lack of liquidity below the $2,200 level.
Currently, price is stalling around the entry level of $2,233, because of this, we need to update our trade.
Trade Changes
Price Stalling at Entry ($2,233)
The price is hovering near the original short entry point of $2,233, with no clear break either upward or downward. This stalling menas that the bears haven’t gained full control yet, and the market is waiting for more significant momentum or news to drive the next move.
Volume Profile and Liquidity:
As noted previously, the lack of volume below the $2,200 level is key. If price can break below $2,200 with momentum, it’s likely that the market will move more rapidly toward the target of $2,135 due to the thin liquidity in that zone. However, as long as price stalls above $2,200, this is not possible because bulls are still proving too strong.
Trade Adjustments and Opportunities:
Since the price has not moved significantly from the entry level, the current trade setup requires careful management. The original short setup is still valid, but it’s critical to monitor the stalling price action and adjust accordingly.
Maintain Short Position (If Bearish Momentum Continues):
The original short trade remains viable, but some adjustments can help protect the position if the market does not accelerate downward soon.
- Stop Loss: Keep the original stop loss at $2,320.5. This level remains above the recent consolidation highs, providing enough room for the trade to develop.
- Target: The target remains $2,135, as this is the next key support level based on the ascending trendline.
- Watch for Momentum: If the price breaks below $2,200, the trade is more likely to accelerate toward the target. A decisive break below this level should bring higher confidence in the short trade.
Adjustment for Breakout Failure:
If the price continues to stall or reverse upward, it could be time to simply exit the position even before the stop is hit. Time is running out for this trade and if momentum doest move downward soon, it likely will reverse upward.
- Tighten Stop Loss: If you want to reduce risk, you could tighten the stop loss to just above the consolidation zone, around $2,250. This would reduce potential losses in case the price breaks higher.
- Partial Exit: Consider taking partial profits or exiting the trade if price shows consistent failure to break below $2,200 and continues to trade sideways. This would protect capital and allow you to re-enter if a clearer direction forms later.
- New Short Entry (Below $2,200):
If you are looking for a fresh entry, wait for a break below $2,200, which would confirm that the bearish momentum is accelerating.
- Entry: Short on a break below $2,200 with strong momentum.
- Target 1: The original target at $2,135 remains valid.
- Stop Loss: Above the $2,233 entry level to minimize risk on a false breakdown.
Final Thoughts and Strategy Adjustments:
- Short-term Outlook: Neutral to Bearish, as the price has stalled around the entry point, but the short setup is still valid. If price breaks below $2,200, the bearish case becomes stronger, and the trade could accelerate toward the target at $2,135. However, stalling price action near the entry point indicates indecision, requiring cautious trade management.
- Medium-term Outlook: Neutral, especially if price continues to consolidate in the $2,200-$2,250 range. Bulls are likely to step in if the price holds support around $2,200, leading to a possible reversal toward $2,275.
- Long-term Outlook: Bullish, if the trendline support near $2,135 holds. The overall ascending triangle pattern in the broader market remains intact, suggesting that any dip below $2,135 could attract longer-term buying interest.
