How Do You Trade A Dead Cat Bounce?

How Do You Trade A Dead Cat Bounce?

1 Answer

  1. To start with trading, firstly you need to identify the dead cat bounce pattern, you should short the stock when the price action breaks the last bottom created. Then open your trade on the right time. So, make sure to identify a relatively strong bearish trend then mark the bearish impulse with a bearish trend line. You’ll notice price breaks the trend line and increases. Then mark the level of the last bottom and take a note of how price breaks the last bottom, confirming the pattern. Next up, short the stock and place a stop loss order above the top. Lastly, stay in the market until the price creates a bearish move equal to the initial impulse.

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