Trade Idea- ISRG (Short)

 ISRG is similar to the last Idea I put up, remember the double top and the possibility of a head fake/false breakout, ISRG effectively did what was option 2 in the last post. Today's break comes on heavy volume.

 For the purposes of the Swing trend identification, ISRG had a solid swing uptrend with 6 consecutive days of higher highs/higher lows with no noise. The 6th day showed a major red flag, not only was this a day above resistance, but it was a Doji candle (open and close are almost identical producing a small almost undetectable candle body). A Doji is an indecision day and being it was found above resistance and after such a strong swing trend, it was a red flag. For our Swing trend identification, note the orange arrow is the signal candle (last day to make a higher high/higher low). Today the high of the day is below the signal candle's low marked with an orange trendline, this s telling us the Swing uptrend is broken and on heavy volume. The volume is part of the snowball effect of longs entering the trade on the breakout, now selling at a loss-"The Bull Trap".

 3C 15 min showing a base and accumulation and a negative divergence at the false breakout, this is what I call a cycle, from accumulation to mark up, to distribution, and now decline, a cycle.

The hourly 3C chart leaves little doubt of how serious this negative divergence is.

As you can see, my Trend Channel set to an hourly chart, held the entire swing move up, thus making it a reasonable stop for a swing trade on the short side. The channel is reflecting a stop around $375. I know this is an expensive stock, but don't get caught up in how many shares you own, what matters is the % move from money invested. Since the stop is only 5 points away, there's about 1.3% risk in the trade, which is a very narrow risk margin. This has nothing to do with the 2% rule, but it affords you the ability to take on more shares as the risk is minimal. You should however consider the possibility of a gap when position sizing the trade.