For those of you, who have never heard about Apecoin, this token covers a new NFT collection of Bored Ape Yacht Club. All owners of NFTs were given some portion of APE tokens through airdrop, which was also visible in the chart. Hype around NFTs of Bored Ape Yacht Club is still pretty big, because the price is still relatively high.
1D chart of Apecoin chart, Source: Author’s analysis, tradingview.com
Let’s look at the trade
Looking at this specific trade, we need to zoom in to 1H chart. I would be looking at short trade with the following parameters:
- Entry: 15.87 USDT
- 1.Target: 13.09 USDT
- Stoploss: 18.47 USDT
We would be thus looking at profit of 17%, while risking around 16%. This is not ideal position when looking at RRR of 1:1, but mostly due to the huge hype of APE token I would maybe consider bigger stoploss, just to decrease it later. This is a very common practise.
Read also: Coinbase has launched its NFT marketplace
1H chart of Apecoin with given trade, Source: Author’s analysis, tradingview.com
Why this set-up?
If we look at the chart, we can see three strong rejections at the Top, which were followed by a price drawback. The rejection at TOPs is ideal situation to enter the short position. This means that we have already missed the ideal entry, however, we can still enter the trade at retracement. I would only enter the trade through limit orders, not market, since it would only increase our risk and decrease potential profit. Therefore, we should wait till the price retraces a bit back up, before it falls down further.
Probably the biggest risk of this trade is the fact that we need to use limit order for the short. However, this is very common for limit orders, so we always need to account for this risk.