(Taken from SandP50analyst.com)
When you have a dramatic move up or down, people try to chase it. You should use a 2 min chart for this. So for example:
FSLR - within the first 30 mins of open, this thing gapped down hard.
What you do is wait for it to kind of bottom out. Once it has bottomed out, draw a Fibonacci retracement from the beginning of the fall to the end (where it bottomed out). Now the 50% retracment is where the ambush will happen. You want to put a short order around that 50% retracement. You can confirm that it will move down from the 50% by waiting for the candle that hit the 50% to be formed. THe second candle should have closed lower than the low of the previous candle.
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