(binned per thread starter's request) Market bottom rotation trad

EURCHF

Update on MU, looking for long if micro highs are taken out.

EJ, M5 ?

Eyes on EURJPY potential flagship play of the day.

Buying this shelf EJ..

UCAD .. break higher.. seller weakness.

EJ: +1R

3R ..Nice canister gas in the end.

eyes on gyen.. it's turn now..

0.5 R. Higher high's into supply.

And here we go first first flagship play ending with a disapointing flop. Closed long at BE. Chances are bulls might not be done yet, but the squeeze was defenetly missing.

Well done on this one, looks like i overlooked GJ , nice secondary play to EJ. You spoted good setup, but on take profit side this is defenetly under-performance, you should be aiming for at least 1:1 structural targets on TP. Prefered play should be with scaling out of position in 3 or more chunks (30-30-30%).

Point taken. and yes, should be at least 1:1.. Late entry on my part too.

43,24 MDLZ on watch for long .
EDIT: Actually scrap that, B quality play, too weak volatility.

162,99 MCD on long play if tested.

PTEN and LEN on potential play.

Consistent down trend with lower highs + low float + news release to spark a panic on short side = powderkeg.

This behaviour is relevant to any asset, but it is especially common on equity assets of companies with bad long term outlook. In order to have massive short squeeze certain qualifiers have to be meet which creates the process in the first place.

Massive short squeeze can be traded in both directions, first long on the actual squeeze point when initial supply or whole area supply is taken out, and then on short side if it reaches parabolic state with heavy rejection. Massive short squeeze is the most persistent and high quality performing setup from all the patterns traded described in this strategy, simply becouse the chances for a squeeze once all requirements are meet are very high, and once the squeeze is baked there is 95% chance that this asset will correct on price to all the way where the squeeze was initiated (total 100% correction). This means that this setup overall has much higher statistical performance than continuation or weaker supply/demand takeout setups. Also considering the usual move it also provides by far the best RR on a trade, heavily out-performing any other setup.

Each asset has a limited supply up to certain extent, especially equities and crypto currencies have fixed limited supply, while fiat currencies have somewhat slightly (or in some cases heavily) expanding outstanding supply as central banks / investment banks or goverments issue more money or debt.
That means that assets will have very different levels of outstanding supply versus their demand, for example there might be crypto currency with 100.000 coins in outstanding supply, a company with 15 milion outstanding shares, a fiat currency with 10 billion USD nominated floating currency. Outstanding supply has drastic effect on how asset behaves, generally assets with very large outstanding supply move very slowly in small volatility and very rarely have strong moves (as its huge amount of different people / players that are contributing towards it, while assets with very low outstanding supply might have very frequent massive quick moves as very few hands and opinions impact the float in general. To use a poker analogy at which time and place does poker game become very volatile at beginning with 6 players and small bet size, or over time after plenty hands when only 2 participants are behind table and bets are in large size.
Generally the assets that have large outstanding supply but also move a lot in strong volatility are the assets that have huge demand and large liquidity, however that will not be the case for most assets.

Lower highs are a great info for a short squeeze trader, becouse they ensure that large amount of short sellers is still in positions. If those highs get tested and taken out and the down trend progresses lower, then the chances are that shorts have been already cleared out, thus decreasing the chance of short squeeze. Therefore a downtrend that has potential for a squeeze should be slowly droping and consistenly progressing with lower highs (slow progress ensures that over time more and more participants will enter on asset, as opose to strong quickly moving trend).

One thing to note, shorting after the squeeze should never be done by holding position over night. This can be very dangerous behaviour as with shorting equities it is possible to get in debt with broker (loosing more than just whole account), if the price opens next day with massive gap up. Always close short positions before market close.




DXR example from last 3 days (note the price behaviour on 13th and 14th March, progressing higher strongly while the shorts press forward):



IFON


RIOT



ECYT example in October 2017.




Generally the stock that has had large short squeeze before will often repeat that behaviour as long as all required puzzles remain there. On FX side massive short squeezes are more rare pattern and usually only happen every half year or so, an example is RUB and CHF.





Plotting for a potential large short squeeze is all about thinking few steps ahead, and it might seem like a lot research to be done, but once trader gets in routine with it it becomes very easy on how to quickly qualify potential asset. It is very much worth it, a single massive short squeeze trade will pay for many other trades.
Trading the squeeze on short side is very easy in terms of qualifyng the pattern becouse its obvious once the squeeze is baked, however it is a bit more tricky but also much more rewarding to play it on long side.

Late I know.. ucad potential demand failure ..m5

LEN went with larger SL on this one using trendlined lows. 1.5 R gain.

Last play of the day would be potentially GJ long. Its along macro setup path and on M1 pullback leg set a decent rotation. (Basically same play as EURCHF yesterday, pullback rotation right on the liquidity gap area of macro setup).