DEEP - Finding The Next Trade Setup

DEEP recently took out the January 13, 2025 low at $0.12345 with a Swing Failure Pattern (SFP), followed by a successful retest. This led to a bounce that hit a key level at $0.12141, presenting a solid long opportunity with minimal risk.

After this, the market turned bullish, forming a 5-wave structure and rallying to the 0.786 Fibonacci retracement level at $0.18643 (measured from the $0.20473 high to the $0.11922 low). This was a key take-profit zone for longs and a great short opportunity.

Adding confluence, the anchored VWAP also acted as resistance just above at $0.19, offering another low-risk short setup. Additionally, a key resistance level at $0.1809 further reinforced the rejection zone.

Current Price Action & Short Setup

From the 0.786 Fib retracement, DEEP retraced 20% downward, nearly touching the 0.618 retracement of the 5-wave structure before bouncing. Now, price is finding resistance at the golden pocket (0.618 at $0.17347 and 0.666 at $0.17534) of the recent drop, aligning perfectly with the daily 21 EMA ($0.1757) and daily SMA ($0.17347).

This setup suggests an ABC corrective move is forming.

• Using the trend-based Fibonacci extension, the 0.786 extension aligns with the 0.618 retracement at $0.1457, creating a strong short setup.
  
• Short Entry: Between $0.17347 - $0.17534
  
• Target: $0.1457 (0.786 trend-based Fib extension / 0.618 retracement)
  
• Stop Loss: $0.1845
  
• Risk/Reward: 2.5:1
  

There’s also potential to extend the target to the 1:1 trend-based Fib extension at $0.13733, but this would depend on price action.

Potential Long Setup

If price reaches the $0.1457 support zone, this could present a high-probability long opportunity.

• Entry: Around $0.1457
  
• Risk/Reward: 2:1 or better, but confirmation is needed before executing the trade