$UNXL is a recent high-flying momentum stock that has been clobbered recently. It has come down from a recent high of $37.44 to $21.60 in 5 days. Indicators point to an oversold condition. Volume has been diminishing every day. Candles are becoming narrower. Narrow candles simply means reduced volatility after a big run up or down. This is where change of direction usually takes place and a trader finds opportunity.
The stock also has over 39% float short. Any stability and price in the bounce direction will cause an explosive short squeeze – a perfect example of Bulls On Wall Street’s “Rubber Band Snap Bounce/Squeeze” play. We go over this setup in more detail in the Bulls Trading Bootcamp.
Let’s check out a 15 minute chart to see how it setup an explosive late-Friday bottom bounce squeeze.
- 1. The $21.60 area holds for 4 days now as the stock forms a descending triangle pattern.
2. Long at $22.29 on triangle trend line break with a stop right below $22.
3.The 50 EMA has been acting as resistance. Stock makes a small base right below the 50 EMA resistance (always a great sign) and just explode through it.
4. Sold some at $22.70/$23.50 as it makes a high of $24.10. Swinging some position over the weekend since I have a decent cushion now and good probability this bounce might continue more.
30 cent risk and about $1.80 gains so far.
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