By this time, the stock's bullish momentum has slowly drained through the criss-cross price swings. Relative strength indicators now signal sharp negative divergence but price continues to hold up well through this sideways development. Momentum indicators roll over and Bollinger Bands contract as price range narrows. This double bottom appears to hold as a weak rally draws a third high. But this final bounce fades and traders exit quickly.
Shorts now smell blood and enter initial positions.
Fear increases and stops build just under the double low shelf. Price returns for one final test as negative sentiment expands sharply. Often, price and volatility then contract right at the break point. The bulls must hold this line. However, odds have now shifted firmly against them.