MATIC → Ascending Triangle Breakout? Or Rejection to $0.60?

16 thg 12, 2023

MATIC (Polygon) is at a pivotal moment on the chart; follow-through with the Ascending Triangle and breakout to the upside? Or get rejected a third time and fall back toward the $0.60 level?

How do we trade this? 🤔
To justify a long, we need to break the Resistance Zone and test it for support. We're too close to Resistance to long now, the probability of profit is far too low and the stop loss would have to be placed too far away (bad Risk/Reward). After breaking the Resistance Zone, a protective stop should be placed just below it and a Take Profit at 1:2 Risk/Reward is reasonable.

A short position could be available much sooner if the price is rejected a third time at the resistance zone and falls beneath the Daily 30EMA. What we need is a sell signal bar and confirmation closing on or near their lows, below the 30EMA, and the RSI below the Moving Average.

Until either scenario presents itself, we should remain on the sidelines and watch the price action unfold.


💡 Trade Ideas 💡

Short Entry: $0.885
🟥 Stop Loss: $0.955
✅ Take Profit: $0.755
⚖️ Risk/Reward Ratio: 1:2

Long Entry: $1.017
🟥 Stop Loss: $0.937
✅ Take Profit: $1.177
⚖️ Risk/Reward Ratio: 1:2


🔑 Key Takeaways 🔑

1. Ascending Triangle, Bullish Pattern!
2. Strong Support on Daily 30EMA.
3. At Resistance Zone, Do Not Long Here!
4. RSI at 53.00 and Below Moving Average. Bias to Short.
5. Wait for break of resistance zone to Long. Short if Rejected.


⚠️ Risk Warning! ⚠️
Past performance is not necessarily indicative of future results. You are solely responsible for your trades. Trade at your own risk!


Like 👍 and comment if you found this analysis useful!

22 thg 12, 2023

Ghi chú

MATIC delivered a short opportunity for us! We didn't get third test of the resistance zone to get the nicer entry, but there was a solid scalp opportunity as shown in the graphic above.

Our first signal was the strong bear bar closing on the ascending triangle support. We then received a doji (indecision, trading range bar) and in this context, means the price wasn't eager to return to the triangle. The next bar was the confirmation, the strong bear close below the Daily 30EMA.

Now this poses a problem, the proper placement for the protective stop is still above the two failed attempts to breakout of the Resistance Zone, our risk is now much higher. That means we need to reduce our position size so that the equity loss at the stop loss is no greater than our maximum loss allowed. Our take profit target remained the same as the analysis, $0.755, and we got *exactly* that.

This what's called a short-scalp trade; high probability, high risk, low reward. I personally do not prefer trades with a Risk/Reward Ratio lower than 1:1, but this *is* a reasonable trade if you're strategy and personality traits align better with the scalpers mindset.

Quick Explanation regarding "Maximum Loss Allowed" on a single trade. If you followed the 1% rule, meaning you're not allowed to risk more than 1% of your account equity on a single trade, your stop loss should never be placed such that more than 1% of your equity is lost. Therefore, an account with $100 of equity shall not lose more than $1 on a single trade. This means if your stop loss has to be further away from your entry, like this scalp we just laid out, your position size needs to be smaller so your loss does not exceed 1% of your account equity.

Now this also means your reward will be smaller, and that's fine! Trading is a constant trade-off between Risk, Reward, Probability and the 4th variable, your ability to conduct proper analysis at the close of every bar.

1. If you want more reward and less risk, you will have to decrease your probability.
2. If you want more probability, you will have to increase your risk and decrease your reward.

I will go more into this in my educational content once it's released this spring!

A fresh MATIC update will be coming soon!