Day trading the Dead Cat Bounce Pattern has Five (5) simple steps:
(1) One, we wait for a large, fast-paced move in the price-action on your chart, likely after news is released, or the opening-bell rings.
(2) Two, rather than chasing after a trade, trying to get into the trade while the price-action is moving so quickly, stay patient and wait for the price-action to calm down and then start to retrace back in the opposite direction.
(3) Three, pay close attention looking for a 50% retracement of the move that occurred after the news was released.
(4) Four, look for an entry opportunity going in the same direction as the first move that was too fast for you to catch the first time around.
(5) Five, we place our stop-loss just above the 50% retracement and our profit-target at the 100% extension of the prior move down.
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