Upper wick into resistance or overextended set up

So It's been a while since I have spoken about set ups in particular. That is because i am still developing as a trader and learning set ups as the days go on. My job as a trader is to be an expert at pattern recognition. It is of extreme importance if you are a discretionary trader such as myself, to be able to stare at as many charts as possible and ask yourself what happens if so and so happens. If you see a pattern repeated over and over you've got it! Add it to your file and whenever that same set up happens again you now have a plan. That is what it takes to be a successful trader. Most traders fail in my opinion because they simply don't have the desire or passion to look at the amount of charts it requires to actually ingrain those patterns into your mind. I personally could not envision as better way to spend my weekends :)

Today I am going to talk about the move into resistance after various up days. This could also be an extended move. The key here is that the stock has had many green days and the last day ended with a big upper wick. Meaning there was selling into the close. The examples I will show today are WTI and SGY. Here is a look at the dailies for the two as of today 1:30pm

So notice how yesterday WTI closed with a high upper wick. It started off the day strong but after the lower highs the short signal was given,.If you didnt get in yesterday based on my watch list you had the chance to get in today and I will tell you how. SGY on the other hand was also overextended but it ran into an area of resistance as you can clearly see on the chart.  I will also show you how to trade this chart , which happens to be exactly the same set up as WTI. 

Lets say its the night before so in this case, 12/20/16 you are scanning and you see two great stocks with big upper wick closes which look to be overextended. What do you say to yourself? How do you plan your trade for the next day. First off you know the next day is going to be a short play. Of course nothing is guaranteed but why would you plan for a long. The goal here is to get into the short play as close as you can to the resistance area, So lets say SGY had gapped up this morning over 12 and showed weakness right away. You;d be in RIGHT away because it was close to resistance. Unfortunately that did not happen. What you saw was a flat open and a push higher. Remember the overall set up is NOT a long so that means even if you see a long set up you do not get in. Another important point to mention here is do not simply short at a pop too far away from the resistance area. Wait for the obvious short set up ( if it doesnt reach the resistance zone ). In this case we never reached the resistance zone but when you begin to see lower highs and a crack of a base you know its time to hit that short. If you didnt quite get it there you had another chance once a bear flag formed and cracked. Here is a look at the intraday chart with some annotations.

What about WTI? Well as you can see it was very similar. The only difference here is that there was no big time resistance. What you had here was an obvious overextended chart with a top formed yesterday which would be used as the resistance.  This one didnt even come close to its resistance but as we did on SGY the lower highs could be used as an entry short signal since probability was on your side. No reason to short too quickly out of the gate but once that lower high started to fade off that was your sign of weakness. It worked all day!