A few days ago I had the pleasure of writing about one of my favorite trades the failed follow through. I love them because they are very predictable and tend to work right away. My patience is not my strong suit so these plays work great for me. Let's take a look at the daily chart for FSLR after todays action.
As you can see FSLR has two very big bullish days leading into today's action. I knew I was not going to take a long here no matter what. I also drew the line of daily resistance that price was at. My goal for this in other words was failed follow through, And this is exactly what happened today
At the open we saw a strong candle, which is why having a written out plan and a strong bias is of extreme importance. It also helps in maintaining calm and simply waiting for your bias to confirm. What was I looking for? a failed follow through. What am I looking for to confirm this on the intraday ? I want to see a quick push followed by an even quicker fail. As I always say the daily chart comes first. This one could be taken short as soon as you saw some sign of red, but ONLY because the daily was so extended and it was hitting an area of resistance. If this was a bullish chart with room to go taking a short at the first sign of red would be a pretty impulsive thing to do. Since you had your bias for this action taking a short that quickly was simply you following your fantastic plan. Remember the analogy of the little engine that could and then all of a sudden it couldnt and falls right back down. When all charts align for a failed follow through it tends to be a nice homerun play to the short side. Hope you enjoyed this!
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