KASPA trading plan and technical analysis (4h chart frame)

10月9日

Technical Analysis + trade plan by Blaž Fabjan

Pattern: Falling Wedge

The chart shows a clear Falling Wedge pattern, which is typically a bullish reversal signal. This pattern is characterized by a downward sloping resistance and support line that converges. A breakout from this pattern often leads to a price surge.
The breakout is expected as the price is nearing the end of the wedge and has touched the support line multiple times.

Support and Resistance:

Resistance Line: The upper boundary of the wedge acts as a resistance level. A successful breakout would target higher price levels.

Support Line: The lower boundary of the wedge acts as support and has held several times.

Indicators:

RSI (Relative Strength Index): The RSI is around 38.57, indicating that the asset is close to oversold territory. A bounce is likely once the RSI dips further or consolidates.

Stochastic RSI: Currently, the Stochastic RSI is at 30.08 and 37.92. This also indicates a potential reversal from oversold conditions, supporting the bullish outlook.

Volume: The volume has been declining, which is typical before a breakout. Watch for an increase in volume as confirmation of a breakout.

VMC Cipher B: The indicator suggests that the downward pressure is easing. A shift towards green momentum waves could signal the start of the upward trend.

HMA Histogram: This indicator is showing a very slight bullish crossover, reinforcing the potential for a reversal.

Price Action:
Price is currently consolidating just above the support of the wedge. This creates a critical juncture, where the next few candles could determine the breakout direction.
If the price breaks out of the wedge, expect a retest of the former resistance turned support before moving higher.

Trading Plan by Blaž Fabjan:

Entry:

Aggressive Entry: Enter at the current price (~$0.1366) anticipating an imminent breakout from the falling wedge.


Conservative Entry: Wait for a confirmed breakout above the resistance level of the wedge (around $0.145), followed by a successful retest before entering a long position.
Stop Loss:

Set a stop loss slightly below the wedge support, around $0.127 to $0.129, to limit downside risk in case of a false breakout or continued downtrend.

Targets:

First Target (T1): $0.160 - This target aligns with the previous high and key resistance.
Second Target (T2): $0.180 - If the momentum continues, this level could be reached, representing a measured move from the wedge breakout.
Third Target (T3): $0.200 - For more aggressive traders looking to hold longer, this level represents a strong psychological resistance.

Risk Management:

Position sizing should be calculated based on your risk tolerance, but a 2-3% risk per trade is generally recommended. Ensure you are not overexposed.
Use a trailing stop once the price reaches the first target to lock in profits while allowing for further upside.

Confirmation:

Watch for an increase in volume and strong bullish candles breaking through the wedge's resistance line to confirm the breakout.
If the price fails to break out of the wedge or closes below the support, the pattern is invalidated, and short-term bearish action could continue.

Conclusion:
The falling wedge pattern and supporting indicators suggest a potential bullish breakout in the near term. A well-planned entry near the breakout, combined with a proper stop-loss and profit targets, offers a favorable risk-reward ratio for this setup. Be cautious of potential false breakouts and follow through with the technical signals closely.