GUN/USDT 4-hour chart: Technical overview and long-term strategy
Technical Overview
The RSI(14) on the current 4-hour chart is around 26.68, which is below 30, which is in the oversold zone. This means that the price has fallen significantly and the chances of a reversal have increased. At the same time, volume has increased during the recent bearish candles, especially with the last green candle. This increase in volume indicates that buying pressure is increasing at this level, which indicates a possible rebound. Together, these indicators suggest that the price may potentially go back up for a while.
In the chart, both EMA(9) (around 0.05350) and EMA(21) (0.05661) are tilted above and below the current price (~0.05103), which clearly indicates a bearish trend. EMA(9) reflects a sharp reaction to recent prices, while EMA(21) reflects a medium-term trend. The price is currently below both EMA lines, meaning they are acting as a kind of dynamic resistance. Furthermore, the previous low of 0.04786 USDT is a strong support; if the price falls below it, further declines are certain. On the upside, resistance levels based on the previous high are seen at around 0.0545, 0.0582, 0.0619 USDT. The price may face resistance upon reaching these levels, so these will serve as take-profit targets.
In light of the above indicators, the market is currently bearish, but the oversold RSI and increasing volume indicate a possible bounce. It should be noted that the trading strategy recommends using RSI and support/resistance levels for entry points. Since the risk-reward ratio is supposed to be 1:5, we will keep the stop loss closely monitored near the support and set profit targets accordingly.
Long-term business plan
The following recommendations are based on a long position with a risk-reward of 1:5. The reason for each level is also given:
Entry Point: At around 0.052 USDT, i.e. when the 4-hour candle closes above the EMA(9) (around 0.0535). This level has been chosen in view of the oversold RSI and increasing volume to participate in a potential rebound.
Stop Loss: Will be placed at 0.0470 USDT (slightly below the current low of 0.04786). A move below this would indicate that support has been broken, so the position will be closed at this level to limit losses. This stop level has been chosen keeping in mind the 1:5 risk-reward ratio.
Take Profit 1: at 0.056 USDT. This first target is around EMA(9). The price may encounter resistance here first, so partial profits can be taken in the initial stage.
Take Profit 2: at 0.061 USDT. This is in the intermediate resistance zone (around 0.058–0.061), which is based on strong support/resistance points from past data. A reaction is possible even if the price reaches this level, so a second profit will be taken here as well.
Take Profit 3: at 0.066 USDT. This level is located near the previous close high (0.06483), which provides strong resistance. If the price breaks through it, further bullish momentum is likely.
Take Profit 4: at 0.071 USDT. This is the final target set according to the 1:5 risk-reward. If this level is reached, the trade will be fully realized and will yield a good profit.
References: Theories on indicators used in the analysis support the use of RSI (Relative Strength Index) for bounces in oversold areas, while increasing volume is considered evidence of trend strength. The importance of support/resistance levels is also explained in technical analysis. Finally, the importance of setting stop loss and profit targets under a 1:5 risk-reward ratio is also explained in the trading strategy.
