KCS About to Fall? Maximize Profit with This Chart Analysis!
KCS is falling out of the bull channel and below the 30EMA, leading us to believe the bull run is over and a reversal is about to begin. Do we have the supporting data to enter a short now?
How do we trade this?
Shorting at this very moment is premature. You *could* short now and put a tight stop loss in which gives you more room for profit, but reduced probability since we're lacking confirmation of a reversal. We do have an extended trading range behind us, which is an indication that the price couldn't break resistance and is in fact, a reversal signal. But confirmation is always a wise choice to increase your probability of profit, even if you have to reduce your profit and increase your risk a bit.
A reasonable short would be to wait for this bear bar to close or at least, see the current 1HR bar close below its 200EMA. This gives you a 1:2 Risk/Reward ratio as shown in this analysis, shorting to the Previous High. It's reasonable to hold the entire position to the take profit, but you can also move your stop loss up at 1:1 Risk/Reward or take some partial profits since the macro trend is still bullish. Play this move with your trade management strategy.
Trade Idea
Short Entry: $7.50
Stop Loss: $8.05
Take Profit: $6.40
Risk/Reward Ratio: 1:2
Key Takeaways
1. Currently Testing Bull Channel Support.
2. Extended Trading Range, Reversal Signal.
3. Currently below the 30EMA, Wait for bar to close.
4. Gap to Previous High at $6.30
5. RSI below Moving Average and in a Downtrend. Bias to Short.
6. Wait for Bear Signal Bar for Confirmation to Short.
You are solely responsible for your trades, trade at your own risk!
If you found this analysis helpful, click the Boost button and let us know what you think in the comment section below!
How do we trade this?
Shorting at this very moment is premature. You *could* short now and put a tight stop loss in which gives you more room for profit, but reduced probability since we're lacking confirmation of a reversal. We do have an extended trading range behind us, which is an indication that the price couldn't break resistance and is in fact, a reversal signal. But confirmation is always a wise choice to increase your probability of profit, even if you have to reduce your profit and increase your risk a bit.
A reasonable short would be to wait for this bear bar to close or at least, see the current 1HR bar close below its 200EMA. This gives you a 1:2 Risk/Reward ratio as shown in this analysis, shorting to the Previous High. It's reasonable to hold the entire position to the take profit, but you can also move your stop loss up at 1:1 Risk/Reward or take some partial profits since the macro trend is still bullish. Play this move with your trade management strategy.
Trade Idea
Short Entry: $7.50
Stop Loss: $8.05
Take Profit: $6.40
Risk/Reward Ratio: 1:2
Key Takeaways
1. Currently Testing Bull Channel Support.
2. Extended Trading Range, Reversal Signal.
3. Currently below the 30EMA, Wait for bar to close.
4. Gap to Previous High at $6.30
5. RSI below Moving Average and in a Downtrend. Bias to Short.
6. Wait for Bear Signal Bar for Confirmation to Short.
You are solely responsible for your trades, trade at your own risk!
If you found this analysis helpful, click the Boost button and let us know what you think in the comment section below!
-Joe Dean
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Trader Engineering Course (Coming Soon!)
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