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. 

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



Posted in Breaking News, Charting & Analysis