Scenario 1: Bearish Reversal (Short Entry)
This scenario assumes the recent break below the ascending channel is a valid signal of a short-term bearish reversal. The entry is placed after a confirmation of the breakdown.
Entry Price: $3.50 (Entering at the current price, assuming a conviction in the bearish momentum).
Take Profit (TP) 1: $3.30 (The top of the highlighted purple support zone). This is a conservative target, aiming to capture the move down to the key support.
Take Profit (TP) 2: $3.15 (A potential extension target below the primary support zone, targeting the next significant low not visible on the chart, but often a good practice to set a second target).
Stop Loss (SL): $3.78 (The POC, which also acted as a recent resistance. A move back above this level would invalidate the bearish thesis).
Scenario 2: Bullish Reversal (Long Entry)
This scenario assumes the price will bounce off the key support zone and resume its upward trend within the broader channel structure. This is a counter-trend entry against the immediate downward momentum.
Entry Price: $3.35 (Entering at the top of the key support zone, waiting for a bounce confirmation).
Take Profit (TP) 1: $3.78 (The POC, where significant selling pressure is expected).
Take Profit (TP) 2: $4.50 (The previous high and the top of the ascending channel). This is a more ambitious target, aiming for a full recovery of the previous uptrend.
Stop Loss (SL): $3.25 (Just below the purple support zone. A break and close below this level would indicate a strong downtrend is underway).
Important Considerations for Both Scenarios:
Risk/Reward Ratio: Always calculate your risk/reward ratio before entering a trade. Ensure the potential profit (TP) outweighs the potential loss (SL).
Confirmation: Do not enter a trade blindly. Wait for confirmation signals, such as a bounce off support or a decisive close below resistance, before placing your order.
Volume: Look for volume confirmation. A break with high volume is a stronger signal than a break with low volume.
Price Action: Pay close attention to candlestick patterns at the entry and exit points.
Market Volatility: The crypto market is highly volatile. Be prepared for sudden price swings and be ready to manage your trade accordingly.