Mana Decentraland : A Technical Analysis Thesis
I am writing this thesis to keep record of a potential opportunity in the Crypto market that may be very profitable within the next few weeks. Secondly I wish to communicate the concept of risk management so that readers can thoroughly understand how to cautiously approach this opportunity.
The coin my team and I are spotting is Mana Decentraland. A coin and gaming protocol that has been around for several years. You can find out more about the technology at Www.Decentraland.org.
Despite the technology and credibility in the industry, what truly has our interest in this coin is the chart, its price trajectories and risk to reward ratio.
At current time, Mana is worth .80 cents and has been going side ways in price movement for about 167 days.
Within this time period this asset has also endured a 337 percent drop in price from $1.27 all the way to $.35
As we have dived deeper into the technical analysis of this price drop and sideways action we have been able to fit a very sneaky Triangle within the price action.
This triangle is communicating something very important on a psychological level.
1) Many investors who purchased the coin at the highs have probably endured a painful loss and may have sold their position at a loss to recover somewhere else in the market.
2) There are many opportunists with “double bottom syndrome” hoping the market will reward them with prices closer to $.35 cents again.
3) The price is coiling making lower highs and higher lows since the big drop. If this is indeed a triangle (which is only confirmed once the D wave is explosively broken upwards) 2 types of buyers will immediately be getting back into this asset very emotionally.
Elliot Wave Principle teaches us that The Apex of a triangle (high to low) is often used to project the next price target. Our apex is 344%. This gives us a price Target of $3.50 price.
We Also have a Fibonacci level which we can expect to meet some resistance at about $2.50
When trading a triangle, we are taught to place our stop loss below the C wave of the triangle, because triangles usually explode upwards and never come back to visit prices below. This gives us a clear way to calculate our risk for potential loss. The Risk of this not being a triangle is currently 25 percent away marked by the red line and yellow box. We will use to this to calculate our risk to reward ratio.
Aiming for our first target we have a risk to reward ratio of about 7 to 1. Meaning for every 1 dollar you risk losing, you make $7.
Our second target gives us a risk to reward of 12 to 1
This is a favorable trade setup that usually comes around every few months after many months of sideways action. I will be investing in this project and if you would like to here is how you can calculate how much money you can make and how much you are risking to lose.
Come up with a number you are comfortable with losing. For instance, if you are ok with losing 125 dollars you should buy $500 dollars’ worth of this coin and only sell this it if the price comes below our stop loss of .592572.
Risk (Ok with losing)
The only way to truly confirm if a pattern is an actual triangle is to see an explosive impulsive move once the D wave is touched. Safer investors usually go for this move, understanding they are increasing their risk and lowering the reward ratio as well. If you would like to invest this way, it is understandable. Just keep in mind that D waves usually explode upwards very violently so either you must set an automatic buy stop or be able to catch on right when the move happens. The more the price moves away the larger risk for a potential loss will be. (You must keep your stop loss under the C until prices are well above.)
The D wave is currently at .88748cents. This increases the risk form about 25 to 33 percent. Once again, you must keep the stop loss below the C wave until price is well above and performing well. Eventually when the asset is well above current price and performing well, the Fomo and good news should arrive. Only than will we consider reducing our risk by moving our stop loss higher, under the E wave, and maybe breakeven.
Elliot wave teaches us that all triangle breakouts must follow with a 5 wave impulsive pattern. It also teaches us that price patterns usually repeat in what is called Fractal Wave Theory. Here is a fractal 5 wave impulse that happened on Mana a few months ago on the 4-hour time frame. This is solely to give you an idea of how the price movement might fluctuate in time and not an actual prediction.
To sum it up, I Think this coin will be one of the best performers in the crypto ecosystem within the next few weeks. I hope this can be useful for you. I’ve had some success trading these Cryptos. I also have brought some investing success to a few friends and family members. I hope to continue making profit in crypto by choosing good trade setups and by helping my piers make well educated and informed decisions. If you do take this trade, and it works… think of me around Christmas ;).
Let’s Eat.
