In fact, avoid short sales completely during dramatic falls. When chasing momentum, safe exits vanish and risk escalates dramatically. The first rally into a sharp down gap provides a near-perfect short entry point. This low bar flags where price will likely fail. But watch out.
Price sometimes gaps back in the opposite direction.
In that case, trades must be exited immediately as the prior signal is negated. The key to successful short sale day trading lies in locating short-term support and resistance levels. Note how breaks of hidden support triggered immediate and significant declines during this Creative Computer correction. Simple moving average crossovers flag buying and selling pressure. Signals in the direction of the daily trend tend to be more effective than those against it.