Yesterday started with a gap down, and then the rest of the day was pretty much a trend to the downside. There was a possibility of a cup and handle around noon, and there was also a possibility of a double top around the same time.
There were a few reasons as to why I swung TSLA Puts overnight, some being because of the Golden Goose Strategy I have been implementing, and others because of the psychology of trading that I have been reading up on lately. Highly recommend the book "Trading In The Zone" By Mark Douglas.
There were a few reasons as to why I swung puts overnight:
1) Rejected key levels.
Throughout the day TSLA rejected key levels like the overnight low, the .236 fib line as well as every next level down to a .382 and 1 fib line.
2) Low volume moves to the upside
Almost every move that was made to the upside had very little momentum. There were swings to the upside, but they were backed with very little volume and every trendline to the upside was invalidated.
3) Psychology/Market Makers
The Golden Goose Strategy that I have been implementing has the $633 and $626.53 levels on TSLA as major levels. During power hour the $626.53 fib line was causing a lot of resistance for over a half hour. Quite a few long wick rejections happened in that area. Then it finally pushed through, on relatively low volume, comparatively, and was then rejected by that $633 level.
I mentioned in our discord that I felt like this was "last licks" for market makers to get into TSLA before a big drop down. My thought process was that they would try to pump the market to get it at a higher price, so short the position and increase their upside financially.
4) Descending Triangle
It did not hurt that TSLA also ended the day on a perfectly formed descending triangle, which if it follows its rules, will cause a drop to the downside.