Shooting star candles on gappers setup one of my favorite short trades. A star is a candle that opens and makes an extreme pop and then closes at or near its low. This is indicative of panic buyers who chase a stop up only to have it peak out. When the price slips below its opening, this triggers the same buyers to panic sell out. Once again, I LOVE playing these setups as shorts, as long as I get a stochastics peak off a high band.

We had a nice trade today on (IMCL | Quote | Chart | News | PowerRating) as it gapped up on the open to peak at 36.50 and then sell off into the lows setting up a 3 minute shooting star candle. We took shorts at 36.10 as the 1 minute stochastics momentum peaked out and slipped back under the 80 band. IMCL promptly slipped back down for a very nice channel tightening lean back the last pivot on the day at scalp out the overshoots at 35.57, out + .53. This is a three step simple process: get the shooting star to form, take the short into the stochastics 80 band slips, target 5 period moving averages/pivots. Trail the opening price or high of the body of the star. This setup works excellent especially on gapper stocks in the earnings season.

The Nasdaq 100 e-minis took an impressive bounce off lows to PEAK at the daily 5 and infamous 50 period moving average resistance at 1706. These are the key resistance levels to watch. A failure to break that daily 50 period ma leans to a potential daily mini inverse pup to 1648 levels on the daily lower Bollinger bands.

Good trading gang!