A day trading strategy that enters when price bounces from red back to yesterday's close after a parabolic move up. The example with SMCI shows entering at the first failed red candle and the trade drops immediately after.
This dotted line here is the previous day's close. Previous day close. So the stock opens up, trending up, trending up, trending up, trending up, and all of a sudden you start to see a little bit of momentum subside, maybe bounce, momentum subside, bounce. Right over here, when you see the stock finally going red, you attack.
Now, it's important for price to go up first in this occasion versus coming lower.
I prefer when we get the parabolic move up and then come down, but there are plenty of examples where on that final day it gaps down. Okay, it starts the day red, and then look for a bounce towards the red to green resistance to then get it. So in this example here, this is kind of— let's say this is the SMCI example. The moment that it goes red, you attack here, and then boom, it's just straight down.
