There are different sayings for closing a trade and reversing course (i.e. have a long position, close it, and then go short the same stock). I call this a U-turn trade.
Today I went short LNKD (Linkedin Corp) in p/m (posted on twitter) and rode the stock down towards the 88 level. I covered some and then set a 1% trailing stop. I covered the remaining before the stop was hit but did not give up on the “opportunity”.
I continued to watch the stock on the 5 minute chart and this is what I saw:
I noted on twitter that the stock was drifting back under where I covered the last portion of the short, but that I would be watching the 88 level. Why? Because the RSI was breaching the 30 level, an oversold condition. A good spot to then go long thus starting the 2nd part of the U-turn trade.
So far the bounce has been almost 1% as price is currently arm wrestling with the 20 SMA on the 5 minute chart. RSI continues to rise.