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