MANA/USDT (Short) - bear flag; shorter-term trade idea
Last week, BTC, along with the rest of the crypto market, experienced a sharp drawdown. After a week-long consolidation, the next move truly hinges on today's Jackson Hole speech (10:00am ET). The central bank chairman is expected to comment on the current state of the economy and tell us more about the central bank's next steps in the fight against inflation. There are two base outcomes we can expect:
1. He will sound dovish - economists are seeing serious cracks in the overall economy, and they wish to slow down with financial tightening (not stop it completely); this would be very positive for crypto
2. He will sound hawkish - the inflation is still too high, and they have no intention of stopping tightening even at the expense of the economy; the negative outcome for crypto
We would prefer to bet on the short side as we believe that the market got optimistic a bit too early, and central bankers are likely to set them straight. For this bet, I chose a token which performed relatively worse during the consolidation period. MANA painted a clear bear flag which is likely to break to the downside. We can see that MANA was slowly drifting downwards during the consolidation (red parallel area) while tokens like ETH had a nice rally. The weak relative strength shows a clear negative sentiment.
The strategy would be to wait for the meeting outcome and once the token breaks the trend line to the downside, go short. The profit target would be either the light green line (less risk) or a bit lower support at $0.6290 (more risk). As a stop loss, I would use the upper side of the channel (red line) or the actual entry point if you wish to take less risk. The reverse case would be if the speech boosted the whole market. In that scenario, we would either leave this trade or find a different, relatively strong token and play on the long side.
Happy trading!
Best wishes,
Dollero Technology
1. He will sound dovish - economists are seeing serious cracks in the overall economy, and they wish to slow down with financial tightening (not stop it completely); this would be very positive for crypto
2. He will sound hawkish - the inflation is still too high, and they have no intention of stopping tightening even at the expense of the economy; the negative outcome for crypto
We would prefer to bet on the short side as we believe that the market got optimistic a bit too early, and central bankers are likely to set them straight. For this bet, I chose a token which performed relatively worse during the consolidation period. MANA painted a clear bear flag which is likely to break to the downside. We can see that MANA was slowly drifting downwards during the consolidation (red parallel area) while tokens like ETH had a nice rally. The weak relative strength shows a clear negative sentiment.
The strategy would be to wait for the meeting outcome and once the token breaks the trend line to the downside, go short. The profit target would be either the light green line (less risk) or a bit lower support at $0.6290 (more risk). As a stop loss, I would use the upper side of the channel (red line) or the actual entry point if you wish to take less risk. The reverse case would be if the speech boosted the whole market. In that scenario, we would either leave this trade or find a different, relatively strong token and play on the long side.
Happy trading!
Best wishes,
Dollero Technology