Trading Like A Sniper: A Complete $LINK Setup Analysis

Written by Jason Krutzky, Chartered Meme Technician at Spot Trading.

My fellow degens,

I don't know about you, but trading has gotten a lot more difficult lately.

Good coins are failing. Scammy coins are proliferating. The market keeps giving mixed signals. Hold times are dwindling. 

For now, it seems the days of blindly buying anything gaining traction on the timeline are behind us. Top-blast season has come and gone, at least for now.

It's sad, tbh, because those times are so much fun, but just because the current environment isn't as easy as it once was doesn't mean we can't profit now. We just have to be more selective.

Trading Like A Sniper

When I say we have to be more selective, I mean we have to know exactly what to look for. We have to be patient and wait for our setup. We have to trade like snipers.

That's why I've been incorporating technical analysis lessons into this newsletter: To help you identify what to hunt for.

Today, I'm going to tie together all the lessons I've shared thus far into an actual trade plan on one of the nicest-looking charts I can find across the markets: $LINK.

I'll break down each step of the setup and explain why it's crucial to the overall strategy.

Let's jump in. 

Step One: The Initial Move

Every great coin starts with a speculative bubble. Perhaps the idea of the tech is there, but the actual tech isn't. Maybe the right KOLs are pumping it. Or maybe it's just the state of the overall markets at the time that causes a coin to catch a serious bid. 

In the two years between May 2019 and May 2021, we saw exactly this on $LINK. 

Bulls got head over heels for the name, driving it from $0.20 to an all-time high of $53. That's a 26,453% move. Holy moly. What a ripper, right?

Step Two: The First Big Retracement

The problem is, this kind of insane rally can only do one thing in a bear market: Get absolutely and completely wrecked. And that's exactly what happened. 

Now, for bulls who bought it at $53, that's a pretty big bummer, but for analysts like myself who use this kind of price action to gauge future opportunities, this gives us a great benchmark to measure off of. 

Which brings us to step two of the setup: The first big retracement.

Specifically, when a coin like this goes into a bear market, we're looking for it to find support in what I like to call 'The Secret Zone'. 

The Secret Zone can be found using the Fibonacci measuring tool.

If you measure from the start of the first major move to the high of that move, and then add the 78.6% and 90% retracement levels to your Fibonacci drawing, you'll look for the price to find support within the area between those two retracement levels. 

As seen in the chart of $LINK pictured above, it's here, in this zone, that the coin begins to build a base.

This being a monthly chart, the base is pretty extensive, from May 2022 to August 2023. Over a year down there in the zone, doing seemingly nothing.

But what's actually happening is that smart money is accumulating. 

And what happens when smart money finishes accumulating? The price begins to emerge up and out of the base. 

When the price emerges out of the base, we assume the low is in, and it's time to remeasure the fibs. 

Step Three: Remeasuring The Fibs

Now that we officially have a low put in (evidenced by the price emerging up and out of the base), I always remeasure the fibs from the 'Swing High' (the all-time high), to the 'Swing Low' (the low of the base). 

I also remove The Secret Zone from the measurement and simply use a 50% retracement level. 

The 50% level marks the midway point between the swing high and low, and it acts as the first target for the price to hit once it has fully emerged from the base.

Why target the 50% level instead of the previous highs?

Because the move to the 50% level is a huge move off the lows. From $5 to $29 is nearly a 6x. 

For sharps that were accumulating at $5, that's an incredible profit, and you have to expect some profit-taking to occur eventually. This is the first logical place for that to happen.

It's logical because the 50% level represents a key inflection point.

• If the price is trading below the 50% level of any range, it's much easier for it to return to the bottom of said range.

• If the price is trading above the 50% level of any range, it's much easier for it to return to the top of the range. 

  
  

That's just how price action works.

But what happens once the price gets rejected at the 50% level? Is it over? What should our expectation be? 

This is where I add in the Anchored VWAP.

Step Four: Using The Anchored VWAP From Launch

The Anchored VWAP (aVWAP) tells us the price that the average buyer from a specific point in time paid for a coin. 

You can measure from wherever you want, but one of the best places is from the launch. 

When you anchor a VWAP to the launch day candle, you see the average price paid by ALL participants throughout the coin's history.

This moving average level can act as a key inflection point, too.

• If the price is above the launch day aVWAP, it's more bullish and suggests that buyers are in control.

• If the price is below, it's more bearish and suggests that sellers are in control.

  
  

Simply put: I only want to be in a long position if the price is above the aVWAP from launch. 

Notice on the initial push out of the base, the price spends a few months trading above the aVWAP (the green highlighted area) and then falls below it for a few months (the red highlighted area). 

This is a period of uncertainty. 

Once it gains the aVWAP again, it runs up to that 50% level, and when it gets rejected there, where does it fall back to? The aVWAP once again. 

From March through June of this year, the aVWAP acted as a clear support, and this support is what has allowed it to push higher in July and August.

So, now you have the basis of the setup. Let's talk about the trade.

Step Five: Planning The Trade

First things first, remember what I said earlier about price trading above or below the 50% level of the range. 

While the current price action looks incredibly bullish, we're still stuck below that 50% mark, so I think you have to wait for it to be gained. 'Gained' simply means the price is trading and holding above that level. 

Personally, I'll be looking for a weekly close or two above the 50% level to confirm that it's no longer resistance.

Once above that level, the price can target the previous all-time high. That's an 82% gain from the 50% level. 

But that's just the initial move. In a raging bull market, there's no reason new all-time highs can't be made, and we can use Fibonacci extensions to gauge where price might want to target. 

One of the most used Fib extensions is the 1.618 (The Golden Ratio). 

Measuring from the 50% level to the 1.618 extension brings us to nearly $83/coin, or a 183% move higher from the 50% level. 

So, then, here's my exact trade plan.

Entry: I'm going to use the 50% level as my entry spot. I'm going to let the price gain that level and will be looking to buy the retest, expecting it to hold.

Stop Loss and Target: I'll use the most recent swing low as my stop loss level, and the 1.618 Fibonacci extension as my target.

Risk-To-Reward: If I do exactly this, and this trade works, it offers me a very safe 2.87 Risk-to-Reward ratio.

I'm always targeting trades with at least ~3R. At 2.87, I'm pretty close to that benchmark. 

I can dive deeper into Risk-to-Reward ratios in a future post, but just know that this is how I measure whether a trade is worth taking.

The Takeaway

Here's what this $LINK setup teaches us about trading in harder markets:

Patience pays. Instead of chasing every pump, I've waited over a year for smart money to finish accumulating in The Secret Zone. I let the setup come to me.

Confluence is key. I'm not betting on just one indicator. I have the 50% Fibonacci level, the launch aVWAP acting as support, and a clear risk-reward setup all pointing in the same direction.

Risk management comes first. Even with all this analysis, I'm still waiting for confirmation above the 50% level before entering. No FOMO, no exceptions.

This is what being a sniper looks like: One high-probability shot with multiple reasons to pull the trigger and a clear exit plan if I'm wrong.

The market might be harder now, but setups like this still exist. You just have to be patient enough to wait for them.

Also, a fun fact for you: This setup is fractal, so it occurs on all time frames. 

Can you guess why I liked $URANUS and $TROLL so much a few weeks ago? And why I like $GOR and $KLED so much right now? 

It's because of this setup.