Riding the BNX Wave: Next Trade Setups

Since BNX surged an astounding +381% in just 3.5 days, it has rapidly reached a key high. However, the dramatic move on low volume has left the market in a tight range, raising questions about a potential correction. Let’s break down the current market structure and explore the key support and resistance levels, followed by specific trade setups.

Looking Back: Market Structure & Trends

BNX’s meteoric rise over a short period has captured attention, but such rapid gains often invite consolidation or a pullback. After hitting the key high, the price was tested and subsequently rejected, particularly on low volume. This rejection signals that the bullish drive may be exhausting, setting the stage for a possible downward correction. Since then, BNX has been trading in a narrow range, reflecting market indecision as traders await further direction.

Key Support Zones & Confluences

Primary Support Zone – Around $0.6:

Moving Averages Confluence: The 21-period EMA and SMA on the 4-hour, weekly, and monthly charts are clustered between approximately $0.585 and $0.553. This convergence creates a robust support area where price is likely to find stability.
Lower Timeframe Trend Insight: My beta indicator on the 15-minute chart, which marks the edge of the bullish trend, further reinforces this support level.

Fibonacci Confluence:

The 0.382 Fibonacci retracement sits at around $0.5426, lending additional support.
The Fibonacci Speed Fan (0.5 level) aligns near $0.56, complementing the overall support picture.

This confluence of technical factors makes the $0.6 zone a crucial area to monitor, as it represents a potential floor should the market trend lower.

Resistance Levels & Confluences

Key Resistance – The Recent High:

Rapid Price Surge & Rejection: BNX’s swift ascent culminated in a key high that was subsequently tested and rejected. The rejection, especially on low volume, indicates that the upward momentum may be losing steam.
Fibonacci Resistance: Notably, the price has also encountered the 0.382 Fibonacci retracement at $0.75, which acts as an additional layer of resistance.
Psychological Resistance: The key high now serves as a significant resistance level, acting as a barrier that the price must overcome to resume its bullish trend.

Potential Trade Setups

Short Trade Setup

Given the rejection at the key high and the low-volume consolidation, a breakdown from this level is anticipated. This scenario makes a short position attractive, as a failed test of the high could trigger further downward movement.

Entry & Stop Loss (SL):

Entry: Initiate a short position at the key high, followed by a rejection.
Stop Loss: Place your stop loss just above the key high to mitigate risk.

Target & Risk/Reward:

Target: Aim for the primary support zone around $0.6, where multiple indicators converge.
Risk-Reward Ratio: The setup targets a favourable risk/reward ratio of 3:1 or better, making it an appealing opportunity for traders.

Long Trade Setup

Despite the clear support confluence around the $0.6 area, entering a long position at this stage carries a less compelling risk/reward profile compared to the short trade.

Entry & Stop Loss (SL):

Entry: Consider a long entry if the price shows strength and decisively holds above the support zone.
Stop Loss: Position the stop loss just below the support area to accommodate minor fluctuations.

Target & Risk/Reward:

Target: The target for a long setup would be the previous swing low.
Risk-Reward Ratio: This trade offers a ratio in the range of 1:1 to 2.5:1, which is alright compared to the short setup.

交易進行

Took out the key high and rejected as anticipated 🔥

交易結束：達到停損點

Closed the trade as soon as the price surpassed the daily open, with bullish momentum.