Now notice the rejection at the top and the volume (arrow #2). It hit heavy selling and started going back down. Good thing we didn't chase. High volume areas love to retrace and this is looking like an obvious short here. Of course, you don't want to chase on the way down any more than you want to chase on the way up. So.... I waited for the retest near arrow #3. Smaller time frames shows how it was hitting 12.60 and a ton of resistance so I went short with a small position at 12.60 with a stop at 12.85. It could have tested higher so I started small but the stop was fairly safe above the high volume rejection. I kept my stop the next day since it was backed up with high volume but then dropped it to 12.6 after the high volume rejection there. Thursday was the day before the monthly NFP report on Friday before market open so, I covered 1/2 of my short position just before market close at 11.9 (#4).
Friday morning, it opened higher but I left my stop above 12..6 after booking partial profits. It didn't take off so I waited for a retest of the open around 12, resold the shares I had covered and doubled down with a new stop just above the High of the day (similar area to arrow #4). This was confirmed by the low volume with arrow #5 that it was not a strong move upward. You don't ever want to average down (or up on a short) you want to add to the trades that are going the way you want them vs. to losers.
It had a pretty good bounce there on decent (but not super high) volume near #6. Knowing it would retest, again, I didn't chase it. I waited for it to come back on low volume and sold ITM Puts. Buying options is a tough way to make $$ but selling them is a great way to hedge and take profits.
The next day, I did nothing, everything was working well. Then came today, March 13. It had been working well so I was looking for a pop to add sell some more shares short. There is a trendline down around 11 that isn't on the chart that should have some resistance so I had planned to buy a pop and hedge or sell down below 11.25. I added to the short aroudn 11.70 the second time (rejected the firs time, then retested) with a stop around 11.80. Then all hell broke loose and it dropped like a rock. You can't see it but the bottom wick near #8 goes way down into that huge volume bar. That volume showed stopping volume and a rejection at lows. The volume and the rejection indicated there was a high probability of this thing going up. With that much volume and the rejection (strength), I covered 1/2 of my short into the strength and hedged the other half selling ITM puts. As you can see, it was a huge bear trap as it dropped like a rock. Then it came back at the end of the day to trap bulls.
Friday morning, it opened higher but I left my stop above 12..6 after booking partial profits. It didn't take off so I waited for a retest of the open around 12, resold the shares I had covered and doubled down with a new stop just above the High of the day (similar area to arrow #4). This was confirmed by the low volume with arrow #5 that it was not a strong move upward. You don't ever want to average down (or up on a short) you want to add to the trades that are going the way you want them vs. to losers.
It had a pretty good bounce there on decent (but not super high) volume near #6. Knowing it would retest, again, I didn't chase it. I waited for it to come back on low volume and sold ITM Puts. Buying options is a tough way to make $$ but selling them is a great way to hedge and take profits.
The next day, I did nothing, everything was working well. Then came today, March 13. It had been working well so I was looking for a pop to add sell some more shares short. There is a trendline down around 11 that isn't on the chart that should have some resistance so I had planned to buy a pop and hedge or sell down below 11.25. I added to the short aroudn 11.70 the second time (rejected the firs time, then retested) with a stop around 11.80. Then all hell broke loose and it dropped like a rock. You can't see it but the bottom wick near #8 goes way down into that huge volume bar. That volume showed stopping volume and a rejection at lows. The volume and the rejection indicated there was a high probability of this thing going up. With that much volume and the rejection (strength), I covered 1/2 of my short into the strength and hedged the other half selling ITM puts. As you can see, it was a huge bear trap as it dropped like a rock. Then it came back at the end of the day to trap bulls.