Tron $TRX Price Analysis: Hedge Edition

Picture Cred: EWN; Disclaimer at the bottom of the article
Clear double-top painted itself on the daily chart for Tron a few weeks ago.

However, it looks like the effects of that move may be coming to an end (hopefully for Tron holders that have decided to go long on this coin for some reason)

If you want to know more about double-top patterns, I wrote an article on all of it here:

View at Medium.com

The distance between the top of the Double-Top and the neckline was 304 sats.

Being generous, that would’ve meant 762–300=460 sats was in play.

However, it appears that Tron may have already bottomed out (possibly).

540 sat range appears to resonate with a reliable support+resistance point on this chart.

Check out the spots where I made the yellow circles to see those major tests of this point as a resistance and a support on various occassions.

Overhead resistance on the daily at 587 sats

Apart from the EMA-26 (depicted above), there appears to be another chart related resistance around 600 sats or so.

I wouldn’t trust this trade without a stop loss on it (not financial advice; I’m not a financial advisor).

Before I do a R/R analysis and S/L recommendation, I’m going to go ahead and look at this on a smaller TF than the daily to make sure that nothing crazy is brewing there.

Above is the 4H chart. Downtrend line established from May 26th to July 12th

Appears that price direction has finally changed in a somewhat reliable and trending fashion upward for the first time since May 11th to May 26th.

RSI is hanging toward the overbought side of things as well on the 4H chart.

I’m wary of this RSI here, but it doesn’t necessarily mean that the party is being shutdown.

It isn’t quite in the overbought range and the price has been drilled down so much in the past few weeks/months that even a slight 5–10% boost in the price registers as a surge in buying pressure.

Remember, it’s called the Relative Strength Indicator, not the ‘Objective’ Strength Indicator.

Volume has been diverging with the price over the past few periods on the 4H TF

This is bearish divergence of volume above. Not necessarily a positive sign.

Honestly, we’re in a situation where it appears as though the price of $TRX can either go up or down.

Fundamental Analysis

This is going to help understand some of the recent price movement on the coin, $TRX as well as the potential sentiment that may be brewing on the coin itself.

  1. Mex Exchange Addition

In case you’ve been living under a rock, you’re probably aware of the fact that Mex decided to add $TRX to its exchange on June 27th (see below):

https://platform.twitter.com/widgets.js

As I noted many times before, I figured that this would serve as nothing but a free invitation for the whales to simply short the protocol into the ground. And for the most part, that’s what’s happened to the price:

Price has depreciated by -21.92% since the addition of Mex futures.

In that same time span, the crypto market capitalization has actually increased and so has Bitcoin.

So, $TRX’s move downward was actually fairly independent of the markets as a whole. Which further bolster my theory that the Mex addition essentially messed things up for $TRX bulls.

Here’s a more thorough article I wrote on it because I used $ADA as a prior example of how Mex can lead to projects being shorted to oblivion (and all the ones lower than $LTC on a market capitalization level essentially have been at this point.

View at Medium.com

So Why Did the Price Raise?

One reason, I’m guessing, could be due to Justin Sun’s recent announcement about “something special” that will occur at the end of the month (July).

View at Medium.com

Not a huge fan of GlobalCoinReport, but it gives the pertinent details for this (which are hardly any other than Justin Sun claiming that he had something ‘special’).

I’m not sure that a partnership is going to really move the needle on this project to be entirely honest.

This announcement came out on June 9th, so I’m not sure if it triggered the recent ‘break’ in the downtrend resistance from late May that was broken on the 12th, but its still something that’s worth noting.

Conclusion

[Disclaimer: The following is not financial advice neither was anything written above or ever written about $TRX by this author; The author is not a financial adviser. These are just theories/ideas. Follow at your own peril]

Thoughts

Based on what I’m seeing on the lower TF charts, it appears as though some bearish momentum is beginning to take hold of $TRX once again.

I feel fairly confident that the whales on Mex that have been shorting this thing to oblivion are going to continue to help me out.

I also do not think that Justin Sun’s announcement will be enough to seriously help $TRX because mundane fundamental news has not been a mover of markets in the last few weeks/months in this bear market.

So, my primary thought would be that a short is a good position on this coin.

However, there is the chance that the localized uptrend that is taking place since July 12th may just continue itself after a brief period of consolidation.

In either case, it seems as though a move downward is a bit more likely than a move upward (price-wise).

So, Here’s What My Strategy Would Be

I’d go to Mex and take a short out on $TRX.

My goal on that short would be to catch that move back downward to 500 sats (hopefully):

That would represent a 7%+ gain.

However, there could be that move upward to $600 that I noted.

So, I’d also open a long position on Binance or some other exchange as well.

Since I favor the short > long outcome, my S/L on both exchanges would be profoundly.

Managing the Short Trade

The ultimate goal is hitting 500 sats (give or take), as stated earlier.

So, I’d enter now at 549 sats and set a S/L at 565 sats. That’s less than 3% potential loss.

The R/R analysis on the short would look like this:

If my S/L on the short trade gets hit, I’d just take those funds, send them to Binance, and then cover w a long from that point.

Long Buy Strategy for $TRX

I’d simultaneously place a long on $TRX at the same entry price.

My S/L however, in this situation would be 530 sats.

Similar to the short strategy that will be running simultaneous, if I’m wrong in my prediction, then I use the funds that were stopped out of the trade and transfer them to Mex to purchase additional short contracts for $TRX.

Below, is what the R/R reward of this move/decision:

Explaining Why This Strategy Works

The strategy that I just outlined is actually designed to ensure victory no matter what the outcome of this trade is (like I said before, hedging is the key to victory).

So, let’s imagine a scenario in where I have $20k to invest in $TRX. I’m not entirely sure which direction it may go, so I have $10k going long and $10k going short.

Let’s Say the Long Trade (Outcome) is What Happens

My short ($100) gets stopped out at 565 sats, which is a loss of -$291 (let’s round it to $300 for slippage + fees from Mex).

I’d take the remaining $9.7k and place it into the long trade at 565 sats.

I stick with my long strategy and then I pull out everything at 600 sats.

Here’s how the profit breakdown would work:

  • My original entry on the long ($10k) would have appreciated by 9.28%, so that’s +$928 profit there.
  • I’m -$300 on my original short trade that I have.
  • I took the remaining $9.7k and threw that in on $TRX at 565 sats. It appreciated +6.19% from that point.
  • That left me with a total of +$600 from the remaining funds from my short that I was S/L’d, which I then used for a long trade on $TRX on Binance or something. This amounts to a net profit of $300 on the money that was originally apportioned to that short trade (so, I’m left with $10.3k).

If you tally up the spoils here, you get $10.3k+$10.9k, which = $21.2k.

That’s a 6%+ ($1,200) profit that’s all but guaranteed with an appropriate hedging strategy.

That’s why my rule = Always Hedge

That’s what smart traders do.

Disclaimer: I do not own $TRX. Nothing in this article is financial advice and I am not a financial adviser. I was not paid to write or distribute this material either.

Thank you!

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