Break Down Short
The break down from a Narrow Range Bar Consolidation (NRBC) is one of the easiest trades to learn. As you can see below you just short the stock when it breaks down below a NRBC area.
The stock should be flat or gapping down in premarket and appear weak.
Excessive gaps do not work, they usually pull up to fill the gap about halfway.
1 or 2 minute charting time frame.
Indicators: 9 ema, 20 sma, VWAP, bunched close together above but near the current price.
All moving averages sloping down is best, increases odds, but not required.
9 ema below the 20 sma or 9 ema crossing down through the 20 sma.
Price at or just below the 20 sma & VWAP.
Consolidation: A fairly even and narrow consolidation area (NRBC).
Volume: at least 80k per minute.
Protective Stop: over the NRBC area.
Entry: under the NRBC area.
1st target is at least equal to the protective stop, and at the first stop in moment and/or at resistance such as a whole number, or a support area; sell 1/2 of your share size and move stop to even..
2nd profit target is at the 9 ema or at the next green candle that pulls back more than halfway up the previous red candle; sell another 1/2 so you have 1/4 position remaining.
Move the protective stop loss down just over last NRBC break down area or over the 9 ema or over the 20 sma.
Adding Shares: You can double the number of shares you currently hold each time a red candle drops below a green candle at a NRBC point in the downtrend. So if you have 100 shares, you can add 100 shares, as long as the overall down trend remains stable below the 20 sma.
Keep your final stop over the 20 sma.
Do not add after 3 waves down or after a large quick surge down.
200 sma - White Line
VWAP - purple line
20 sma - green line
9 ema - red line