There are times when we get into a position, and the asset we buy suddenly surges, then it goes parabolic, and then we find ourselves wondering…
Should I sell now and get out or should I wait for a higher price?
Today, I had the opportunity to take snapshots of the series of events and be able to walk with you through the chronological events…
It started out with TRON (TRXUSD) a couple of days ago when my alerts for a breakout went off. The green UP arrow is where I took a small position. Within the week, I was alerted to a parabolic spike that happened this morning. I checked the rest of the cryptocurrencies and nothing was spiking more than 10%, except TRON. That was the first red flag.
I next went into the hourly charts to take a look and indeed there was a sudden parabolic run over the last 2 hours or so. The MACD looked stretched, the price was so far out, and away from the 55EMA. It was a matter of time it would fall back to ground. The second red flag here.
I then went further down to check the 5minute charts. Seldom do I do this, but in such a circumstance, we need to look into the price action in smaller chunks. I then switched on the TD Sequential and saw that it was in the middle of a Setup. This set up looked a bit odd as the high was at the fourth candle and it was really far out. A fifth candle reversal is quite acceptable so I was watching the sixth candle form. Noted the long tails at the top of these few candles. There was also a gap between the third and fourth candle, and two outcomes of a gap comes to mind; a gap-and-run or a gap-and-close. The firth candle closed the gap, although the sixth candle was bullish, had to wait a bit to see how strong the bulls really are, if any surprises were to be up. However, this was the third red flag.
The sixth candle disappointed, and the TD Sequential got cancelled, and an opposing Sequential started! Then a second candle of the opposing TD Sequential formed. The fourth red flag.
By the start of the opposing TD Sequential third candle, I exited my position. The point of exit is marked by a red down arrow.
Enough red flags, and without a doubt, it is no longer sustainable.
This is what happened 6 hours later… see how stretched the price was
It looks really ugly on the daily chart really.
Zooming back into the 5minute chart, I demonstrate the trend reversal pattern that I posted about previously by marking out the points where lower highs and lower lows were formed.
I hope this series of chronology demonstrates how one could learn how to handle a parabolic run. Many lessons lie within this experience and I hope to share it with you for educational purposes.
Just for the record, the picture below shows how much profit was kept… from 0.02239 to 0.03227; that’s a whopping 44%!
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