Technical analysis of DGB, ALGO
DGB – Too Early to Call a Bottom of this Ugly Downtrend Despite of Some Improvements Recently
DGB (DigiByte) is in a Strong Downtrend on all time horizons (Long-, Medium-, Short-Term). DGB’s situation is turning from bad to worse, as a Death-Cross formed recently on November 14. The price formed support at ~0.0183, and this support held twice, but OBV is trending downwards, which means that more volume is traded on down-days while up-days have thinner volume. Hence, buyers are not stepping up yet. Although RSI (momentum indicator) bounced from oversold levels, it is still below 50 and is trending downwards. Price of DGB is below all major SMAs, which makes it tough for DGB to find support, while its resistances above are plentiful. MACD formed buy signal on November 6 as the price bounced off Support and ADX is at 14.9, which means the Downtrend is weakening. Could the price be approaching bottom? We still see stronger evidence suggesting continued downtrend rather than a reversal.
ALGO – Downtrend Turned Into Sideways Trend But OBV Shows That Bears Are Still in Control
ALGO (Algorand) is in a Downtrend on all time horizons, although Short-Term trend is improving into a sideways trend. Confirming the Downtrend is a Death-Cross that formed on November 4. Price has support at ~$0.22, but OBV is declining, as volume on down-days exceeds volume on up-days (more sellers than buyers). Although RSI (momentum indicator) bounced from oversold levels, it is still below 50, and is trending downwards. Price of ALGO is below all major SMAs, which makes it tough to find support, while its resistances above are plentiful. On the positive note, MACD formed buy signal on November 6 as the price bounced off Support and ADX is at 17.4, which means the Downtrend is weakening. Could the price be approaching bottom? We still see stronger evidence suggesting continued downtrend rather than a reversal.
Risk management – Stop Loss and trade size. In all of these setups, traders should use Stop Loss orders to manage their downside risk, in case the trade goes against us, as it often will. Trading is about probabilities and even though these setups have a high win rate, one must be prepared to minimize losses on the trades that go bust. If Stop Loss order types are not supported by they exchange, at least set up a price alert (see video). Also, trade size should be such that you never risk losing more than 2% of your total equity. Keeping the trade size small allows the trader to setup a wider Stop Loss, which gives the trade more room and time to complete with success. Setting Stop Loss levels too tight can often result in getting knocked out of a trade prematurely.
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