Binance Coin: How can traders profit from shorting this setup?

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Given the lack of on-chain activity and the lack of development progress, it is safe to assume that retail interest is the primary driver for Binance Coin. In terms of keeping up with broader market trends, the alt did not disappoint, particularly after BTC reclaimed the $55K mark.

However, a minor market correction has resulted in some bearish predictions for the world’s fourth largest altcoin. Its bullish structure was jeopardised by the possibility of an up-channel breakdown. BNB was trading at $421 at the time of writing, down 4.3 percent in the previous 24 hours.

BNB 4-hour Chart

BNB was undergoing a third assault on its pattern’s lower trendline, which coincided with a $420 support line. Sellers had the momentum to force a breakdown from BNB’s setup since the 4-hour 50-SMA (yellow) flipped bearish.

A break below $4250-$420 could result in a 4.5 percent drop to the confluence of the 4-hour 200-SMA (green) and $400-support. If buyers are unable to retaliate, BNB may continue to bleed until it reaches a major defensive line of $385. Overall, this would be an 8.5 percent drop from BNB’s press-time level.

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On the other hand, a rebound above the 50-SMA would lower chances of a bearish outcome. Bulls can target a fresh higher high around $450 after negotiating past the mid-line of the pattern.

Reasoning 

Indicators, surprisingly, sided with the bears, flashing multiple sell signals. For example, the RSI was unable to find support at the mid-line and had entered bearish territory. A drop below 40 would increase selling pressure.

The Awesome Oscillator agreed after falling below its half-line as a result of a bearish twin peak setup. The MACD did not fare much better. The index showed a pattern of lower peaks as it approached the equilibrium point.

Conclusion 

Based on the foregoing, BNB is expected to break south from its up-channel in the coming sessions. Traders can profit by entering short positions once BNB falls below $420. A reasonable take-profit level is $400, and stop losses can be set above the 50-SMA at $430.

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