Expecting short lived outperformance of SOL against BNB
TLDR: short term play to flip BNB in SOL and back, as BNB seems to be stronger in the longer term
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Overview
After a meteoric rise in the first half of 2021, SOL started to roll over in Sep '21, both in fiat term and against BTC. This trend is even more prevalent when observing the trading pair SOL/BNB.
Technicals of the lower time frames, daily and hourly, are showing positive divergence, which suggests a local bottom is likely almost/already in place.
A corrective rally is expected before the rollover resumes.
While a counter trend rally is generally difficult to trade, this one seems to have a very favorable R:R (>5) in BNB term.
EW interpretation
SOL has arguably shown 5 waves down, with 1.618 and 0.854 extensions (blue fibs) being hit respectively by the end of wave 3 and 4.
Wave 5 missed the 2.854 extension by a hair and came right into 0.5 retracement of the 2021 rally.
Assuming the counter trend rally has already started, it would typically get back to 0.382-0.618 retracement of the blue 5 waves, i.e. 0.2-0.3 BNB.
The centre of this target range, 0.5 retracement or 0.25 BNB, also coincide with a huge spike on the volume profile, as wel with the blue 1.236-1.382 extension.
Even at the lower end of this target range, 0.382 retracement or 0.2 BNB, R:R (>3) is still quite favorable.
Risk assessment
One should consider this trade only if you want to accumulate BNB, as both alts can lose value in fiat or BTC term dramatically. This thesis will hold as long as BNB is the less ugly one.
Placing the stop just under the blue 2.854 extension, if hit, loss will be 16% in BNB term.
--
Overview
After a meteoric rise in the first half of 2021, SOL started to roll over in Sep '21, both in fiat term and against BTC. This trend is even more prevalent when observing the trading pair SOL/BNB.
Technicals of the lower time frames, daily and hourly, are showing positive divergence, which suggests a local bottom is likely almost/already in place.
A corrective rally is expected before the rollover resumes.
While a counter trend rally is generally difficult to trade, this one seems to have a very favorable R:R (>5) in BNB term.
EW interpretation
SOL has arguably shown 5 waves down, with 1.618 and 0.854 extensions (blue fibs) being hit respectively by the end of wave 3 and 4.
Wave 5 missed the 2.854 extension by a hair and came right into 0.5 retracement of the 2021 rally.
Assuming the counter trend rally has already started, it would typically get back to 0.382-0.618 retracement of the blue 5 waves, i.e. 0.2-0.3 BNB.
The centre of this target range, 0.5 retracement or 0.25 BNB, also coincide with a huge spike on the volume profile, as wel with the blue 1.236-1.382 extension.
Even at the lower end of this target range, 0.382 retracement or 0.2 BNB, R:R (>3) is still quite favorable.
Risk assessment
One should consider this trade only if you want to accumulate BNB, as both alts can lose value in fiat or BTC term dramatically. This thesis will hold as long as BNB is the less ugly one.
Placing the stop just under the blue 2.854 extension, if hit, loss will be 16% in BNB term.
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