Technical Analysis and Market Entry: Tron’s Critical Support Zone Broken

  • The Tron (TRX) price remains tilted to the downside, as the bears maintain firm control. 
  • TRX/USD has breached a critical area of demand, leaving the door open for further bear capitalisation.

TRX/USD: Recent Price Behavior

The Tron price has been under heavy selling pressure since the late part of June. Sellers hit TRX with some large force after running into a known supply area heading into the $0.04000 territory. TRX/USD is producing a daily evening star candlestick, following it hitting a double top on 25th June. It was in line with the prior rejection seen earlier in June on the 2nd, where a significant retreat in the price was forced.

Since the sellers regained control, TRX/USD has fallen a whopping 50% from the heights of $0.04030 down to $0.02000 on 16th July. During the current near-term bear market, the price has broken and retested a critical ascending trend line. It had been acting as support from 10th May before it was breached on 27th June, exacerbating the move to the downside.

Between 28th June to 6th July, TRX/USD stabilized above a key acting demand zone, $0.03100-$0.02100. The price was then able to regain some upside momentum, seeing a retest of the above-noted broken trend line. The retest was then met with rejection, as the prior support acted as a new firm resistance. Technically, the move played out to the textbook with the breakout and retest.

TRX/USD daily chart.

Critical Demand Zone Broken

There is a large known buying area which runs from $0.02400 down to $0.02150. This area had been serving as support through 2019. TRX/USD had required comfort from this zone on several occasions since January. Prior to acting as demand, the zone was supply, having largely capped the bulls from greater upside. Given the current downside pressure from the bears, the price has been forced to give way and break back below the demand zone.

A breakout south came into play on 16th July – a huge bearish candlestick smashed through the demand area. There was a daily candlestick closure below, which left the door wide open for the bears to further capitalize. At the time of writing, a retest of the zone has been in play, with the rejection noted.

Should TRX/USD bulls fail to regather enough momentum in pushing the price back above the noted territory, then the sellers could further move in. The next major zone of potential safety is seen from $0.01900 down to $0.01600. TRX/USD last traded at these levels in December 2018.

Trade Recommendation

Given the described breach of a critical demand zone, eyes are on further downside pressure. Targets to the south are $0.01900-$0.01600 and then $0.01100, the low area of 2018. Stops to be placed above the new acting supply region at $0.02420.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Author:
Ken has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.