Learning to Day Trade - Part 16

Shorting Failed Breakouts / Resistance

Lately the market has been really weak so shorting failed breakouts can work better than usual. Today $IMGN was getting really close to a $10.00 / $10.04 break but just couldn’t. It got really close but then rolled over. This is similar to shorting bear flags but the risk (resistance level) is much easier to notice.

I’ve marked the two short entries that could have been taken. The risk is it taking out $10.00 resistance (~10c) which is pretty low risk since most stocks were red that day and 3/4 stocks follow the market. If you’re wrong and it takes out $10.00 then you should flip to a long position and ride the breakout. You’ll lose a little on the short but make it all back plus more (hopefully) if it starts moving up.

The end result was incredible on this - from $9.90 down to $8.35.

$IMGN 1 minute candles

Even the 5m doesn’t show any strong bounces until it got close to the market close.

$IMGN 5 minute candles

$IMGN 5 minute candles / multiple days

(white line = previous close, aqua line = VWAP)

Trendlines



Disclaimer

I am not a registered financial adviser/broker/anything. Use this information for entertainment/informational purposes only. Any tickers mentioned are not recommendations to buy/sell/or sell short. They are used as examples only.