Step 1: Price History & Trend Recognition

Examining the daily chart, ALGN has suffered a dramatic price collapse on July 31, with a massive gap-down from $203.57 (previous close) to a low of $127.70 and closing at $129.01. The next day’s session, August 1, opened virtually flat but saw a strong upward reaction, surging to an intraday high of $139 and closing at $136.52. This suggests a potential short-term volatility spike, likely triggered by significant news—possibly earnings or regulatory activity. The exceptionally high volume on July 31 (13.7 million, ~20x normal) confirms a capitulatory move.

Step 2: Candlestick Pattern, Gap Analysis, and Volume Analysis

• July 31st: Massive bearish marubozu with high volume, indicating panic selling or forced liquidation.
• August 1st: Strong bullish engulfing candle recovering a significant portion of the previous day's losses. Huge gap down followed by heavy buying—typical of a dead-cat bounce or short-squeeze scenario.
• Volume: The volume profiles are extremely abnormal for these two candles; this substantiates hyperactive trading and potential institutional repositioning.

Step 3: Support & Resistance Levels

• Nearby support: $129.00 (recent close and previous low), $127.70 (intraday low July 31).
• Immediate resistance: $139.00 (August 1 high), $149.75 (July 31’s intraday high), and a psychological round number at $150.00.
• The price currently trades just above the initial support level but well below any major resistance, sitting within a retracement zone.

Step 4: Fibonacci Retracement

Applying a Fibonacci retracement from July 30 close ($203.57) to July 31 low ($127.70):

• 38.2% retracement: $155.11
• 50% retracement: $165.63
• 61.8% retracement: $176.14 ALGN is currently trading below even the 38.2% fib, suggesting the bounce has covered only a small portion of the crash; full retracement unlikely without further consolidation.

Step 5: Moving Averages & Trend Analysis

• 20-day and 50-day moving averages (approx.): Both would be far above current price (~$185-$195 range), indicating a heavily broken uptrend and confirming a primary downtrend.
• Price is oversold but heavily below all major moving averages; typically, such conditions generate short-term bounces before further trend confirmation.

Step 6: RSI & MACD Indicators

• RSI: Intraday data would likely show RSI sub-20 on July 31 (extreme oversold), bouncing quickly on August 1 into the 30s/40s. This signals an oversold recovery but no strong sign yet of trend reversal.
• MACD: A sharp bearish crossover post-plunge. No divergence to suggest sustainable upside yet.

Step 7: Order Flow & Volume-Weighted Analysis

• Heavy downside volume suggests some institutional capitulation, but the following day’s high-volume recovery indicates possible short-covering rather than genuine bottoming.
• VWAP for August 1 session (intraday midpoint ~$135.5) is close to the close—neutral but with upside wick resistance.

Step 8: Intraday Structure (1h Chart)

• 08:00 to 13:00: Choppy consolidation in the $128-$129.5 range (base-building phase).
• 13:30 - 15:30: Sharp breakout from $130.20 to $139, with progressively increasing volume—a classic volatility cluster.
• 15:30 onward: Bullish exhaustion, price stalls and drifts sideways with lower highs; failed to eclipse $139 again.

Step 9: Pattern Recognition & Probabilities

• This is a high-probability dead-cat bounce/relief rally structure after a major crash. Resistance is stiff between $139-$150. Risk is that this relief will likely be followed by renewed selling pressure as trapped bulls seek to exit and shorts reload.
• No evidence of a true double bottom or base formation yet. Weekly structure is now bearish, with the stock broken below multi-month support.

Step 10: Volatility & Risk Analysis

• Implied volatility is extreme; price could see 3-8% swings intraday.
• Risk/reward for long entries is poor unless confirmed by extended basing; more favorable for short-term short entries into resistance retracements.

Step 11: Synthesis & Final Trading Plan

• Major downtrend confirmed; short-term oversold rebound looks mature as of latest closing print.
• Overhead resistance is thick ($139-$150).
• Early rebound after panic is a textbook setup for a fade/short position into further consolidation or retest of lows.
• Intraday bounce failed to make higher highs post $139; exhaustion is visible.

Position Recommendation: Sell (Short Position)

ALGN is likely to face renewed selling pressure after the current relief rally exhausts. The optimal entry is near the upper end of the August 1 intraday range ($137.50–$139), but with current price at $136.52, it is still an attractive risk/reward for a shorting opportunity, aiming for a modest mean-reversion back toward the $129-$132 support zone over the next 24 hours.

Trade Plan

• Open Short at $137.50 (ideal price targeting minor intraday resistance or the next price bounce)
• Close Short at $130.00 (targeting a retest of breakdown support and the prior dead cat bounce base)
• Protect with stop-loss above $140 (which would invalidate immediate down thesis)

Conclusion

All technical signals—trend, volume, price structure, momentum oscillators, and volatility—suggest this is a high-reward short setup for a 24-hour mean-reversion as relief rally momentum wanes and supply returns below overhead resistance.