Trade Recommendation: Modum

Modum (MOD/BTC) dropped to its yearly low of 0.00008 on August 3, 2018. At that price level, the market was down by almost 92% from the 2018 peak of 0.000935. This type of retracement may discourage the entry of retail investors. However, the risk to reward ratio at such low prices is highly favorable. More importantly, the price action is looking ripe for bottom-picking.

Technical analysis shows that MOD/BTC is currently trading in a wide range between 0.0000867 and 0.0001483. It recently broke below the midpoint of 0.0001171. This may look bearish but this gives us an opportunity to buy the bottom end of the range at 0.0000867. We are confident that this level will hold for several reasons.

First, 0.0000867 is the market’s historical support. Modum dropped at this price level on December 13, 2017. The low point inspired the parabolic rally to the 2018 high of 0.000935. Thus, we can expect buyers to start scaling in once this price level is hit. We saw that happen when the market hit 0.00008 on August 3. The daily candle created a long wick below the body signifying the rejection of lower prices.

Interestingly, the move down to the yearly low of 0.00008 also inspired a strong rally that sent Modum up to 0.0002564 on October 14. This is another indication that Modum protects the 0.00008 price level. More importantly, the buying activity at this level often generates the bullish momentum required to stage a strong rally.

The strategy is to buy the dip as close to 0.0000867 support as possible. If bulls preserve the support, it is likely that the market will rally to our initial target of 0.0001171. Take that out and we can expect it to climb to the top end of the range of 0.0001483.

The process may take more than a month.

Daily Chart of Modum/Bitcoin on Binance

As of this writing, the Modum/Bitcoin pair is trading at 0.0000879 on Binance.

Summary of Strategy

Buy: As close to 0.0000867 as possible.

Target: 0.0001171 first and then 0.0001483.

Stop: 0.0000835

 

Disclaimer: The writer 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.

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.