A trader shows a price pattern where a bounce fails to reclaim the previous day's close, signaling profit-taking and exhaustion. A final gap up before the decline reinforces the setup for a potential dump.
This is the daily chart. Intraday, let's say, kind of start coming down towards the end of the day. So we open up somewhere here. So let's say this is $30 and this is $25, and then we started the move here. Let's say we started the move at $2, $15, and over here we close at $30. So now we're opening up on day 4 at $25. I would prefer if on day 4 we gapped up again and then went red, but there are certain times where on day 4 it opens up weak. And what I'm looking for here is I'm looking for a bounce without the previous day's close reclaiming. So I want see it bounce to the previous day's close and fail, proving once again that the profit taking is occurring. You know, sometimes it may just push a little bit and come back down. Other times it may push right back up and come back down. I personally prefer when there's that final day of another gap up because that's once again more exhaustion.
