Each week we share with you a trading pattern that we use consistently on our desk. Like most successful traders (all?) we have measured the win rate for this trade. In short we are giving you an intraday trading pattern that works. In this SMB Trade of the Week we will share a Bearish Momentum Trade that we made in VistaPrint, stock symbol VPRT. Perhaps you can make this trading pattern your own.

Let’s set up the trade:

VPRT issued downside guidance for Q1 and for the full year.

VPRT gapped down in the premarket to 35.30ish. This indicated an open of down near 15 points. Ouch.

On our long term charts all support levels had been broken.

We opened and there was a battle on the tape at 35.40. VPRT moved above and then below this level a few times. This movement offered an opportunity to get tossed around if you were not careful. Finally VPRT headed towards 35. The sellers had won the first battle of the day.

Volume was done around 35. Since VPRT had gapped down and the first battle had been won by the sellers, and we were below all long term support levels, I started a short position.

I set a stop for 35.26.

When VPRT broke to the downside below 34.80, I added to my short.

At 34.50 buyers gave the shorts some incentive to cover. You cannot cover here! You must let the stock breath, give it a chance to find lower ground.

33 was really the first target to cover that should have entered your mind. There was too much volume done at 35 and VPRT was technically broken to think that only a 50c downmove was next.

This is a Bearish Momentum Trade in VPRT. Perhaps you can make this trading pattern your own. If you have any questions about this trade please send me an email, tweet, or post a comment on our blog.