Alright, students, today we are going to analyze the 4-hour chart of SKYAI/USDT and learn how to find a potential trading opportunity from the chart.
Let's look at the **SKYAI/USDT** chart, and pay special attention to the changes in the **Bollinger Bands**. From December 6 to December 22, did you notice that the upper and lower bands of the Bollinger Bands became very narrow? We call this 'Bollinger Band contraction' or 'squeeze'. It's like a compressed spring, and the market was in a low volatility and consolidation state during this period, with both bulls and bears balanced in power, accumulating energy. Once the price breaks out strongly from this narrow channel, it usually leads to a sharp, trending market. As we saw, the price broke above the upper band of the Bollinger Bands on December 23, and then the Bollinger Bands quickly expanded, indicating that a strong upward trend may have already begun.
**Why set the stop loss at that position?**
Our stop loss is set at 0.0305, based on a clear logic. This position is below the midline of the Bollinger Bands (a key dynamic support level) and the long-term EMA99 moving average. If the price retraces and falls below this area, it means that this upward breakout has likely failed, and market sentiment has turned bearish again. Setting the stop loss here acts as our 'safety net'; once triggered, it indicates that our initial bullish judgment has failed, and we need to exit immediately to control risk.
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**Trading Example:**
- **Entry Point:** 0.0335 (waiting for the price to retrace to the short-term support area)
- **Target 1:** 0.0385 (recent high)
- **Target 2:** 0.0415 (near the previous high)
- **Stop Loss:** 0.0305 (below the key support structure)
**Tip:** Always manage your risk based on the trend of the 4-hour chart.
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