Trade Idea POT (short)

I like this one, it looks to be in a good spot for a more trending type trade.

 This one has been topping any way, so that's a good start, but then it broke below support, remember that we ALMOST ALWAYS see a volatility shakeout move after a major break of support now; it's not like days of past or some very popular technical analysis books which show a top breaking with a very small test of resistance that fails and that being the perfect place to short-times have changed. In white we see the volatility shake out. Then a move lower and a big bear flag. Now that the top has broken, the shakeout has occurred and we have a correction, giving us a lower risk entry, this looks like a pretty high probability/low risk trade. It's also liquid enough that you should be able to use options if you choose to.

 Here's a closer look at the bear flag, you can visually see it is starting to fail within the flag.

 With my custom "Close within the range" indicator which is set to 1 week, you can also see how the closes have switched from building bullish closes near the top of the day's range, to closes near the bottom or in the bottom 25% of the range, a bearish indication.

 Daily 3C calls out the top, from accumulation which was rather small, to confirmation to distribution, I would expect there is a strong institutional short presence in the stock just because the accumulation period was so small, so most of the distribution was probably selling short.

 The hourly chart shows the accumulation for that built the flag bounce and distribution since.

 The 15 min chart shows this more clearly.

My Trend Channel and the bottom support trendline are close to each other, I would prefer shorting this on a break of the Trend Channel, but a phased in entry also makes sense if you want to average your entry and risk.


My first target is around $37.