Vivus – Nasdaq:VVUS chart/ why it dropped today and how to trade it

Thought I’d share this chart & notes on trading a stock that drops quickly intraday.

Today VVUS dropped on FDA news /comments : that caused the initial drop then bounced higher as shorts were covering and as a batch of new buyers stepped in.

http://sg22.ly/xurPfU 

A few people in the chatroom traded this one today as it was dropping as a short and playing the bounce once it based

I gave targets for the bounce of $11.19 – $11.50’s and this is how i got them :

Using Fibonacci retracement levels once I saw it basing over $10.

The key psychological level worked well since if you went long at $10 or if tested just below would have been an easy stop just under that point

Here is the chart & notes below:

As I’m typing this VVUS is bouncing higher to the 2nd fib at 50% ( 11.50’s )

double click on chart to make it larger and be able to read the notes :

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Updated chart : Adding this one to the blog at 4pmEST to show again how the fib level worked on the 2nd bounce

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hope you found this helpful

Stockguy22

 

Posted in Breaking News, Charting & Analysis