Quote from marketsurfer:
english please. 
Is JCP a short here due to spike to 32.55? or is it a long? the technical mumbo jumbo chatter that can be reinterpreted in hindsight any which way, is the hallmark of a true believer.
JCP has technically been in an uptrend since the downtrend confirmed a reversal back on August 10th. The possible reversal was signaled by price pivoting back up off a higher low on 8/6 and the higher low was defended successfully. The "confirmation" occurred on 8/10 when price gapped up through previous resistance (23.16 zone) and that previous resistance level was not even touched on 8/10 and 8/11. This means we have a low (1), a high (2), and a higher low (3), and this common 1-2-3 reversal pattern is confirmed by a break thru 2, in this case, the break through 23.16.
The uptrend remained strong since then with no significant pullbacks until 9/13.
JCP has a short interest of 30% meaning they're ripe for a massive short squeeze if price breaks a very key resistance level. Key resistance is the high on 5/16 (30.02), which was a huge gap down day.
The support level prior to that gap down day was the 32.50 zone.
The space between that gap down high and previous support level is empty "airspace", to the tune of about 2.50.
Technical traders will add to winning long positions on a breakout into that airspace and short sellers will have stops above 30.00. Once price breaks into that airspace, nobody who is long has any strong reason to take profits until price approaches pre-gap support around 32.50.
Does that make sense?
Bob Volman defines trading like this, and I really like this description a lot:
"...how is it possible that a trader would be able to trade anything at all, and walk away with consistent profits to boot? The answer to that is simply that the smart trader does not trade the underlying instrument, he trades other traders. And more so, he trades their pain and incompetence. He trades the fact that they have to react to their many mistakes to protect themselves.
He exploits predicament and agony, all of highly visible on a technical chart. To exploit others more than being exploited himself should be the ultimate satisfaction of any trader who is not in this business out of philanthropic idealism or to indulge in masochistic tendencies."
