PSNY: Fade the Bounce—Overhead Supply Dominates After the Blow-Off Top

Executive Summary

• Regime: Post-spike fade with strong downward momentum back to pre-squeeze value area (1.05–1.12). Overhead supply is heavy between 1.20–1.35 from the late-August blow-off, biasing rallies to be sold over the next 24 hours.
• Probability path (next 24h): Modest bounce toward 1.11–1.13 into the US cash open is likely to be faded; base case retest of 1.06–1.08 by tomorrow’s close. Secondary risk tail: a brief flush toward 1.03–1.05 if 1.08 breaks on volume.
• Trade idea (tactical): Sell a bounce into 1.12 (prior intraday supply) with a take-profit near 1.06 (pre-spike support cluster). Invalidation if price reclaims and holds above 1.16–1.17.

A. Multi-Timeframe Price Structure and Trend

1. Daily context (May–early Sept)

• Range regime for months around 1.03–1.12, then a high-volume spike on 2025-08-27 (H: 1.42, V: 36.5M) followed by two sessions of distribution and a full round trip into the old value area (~1.08–1.12). This is classic “blow-off and fade” structure.
• Price is now back at 1.08–1.10, which acted as a sticky balance area for months. Returning to value after a failed breakout typically invites supply from trapped longs overhead, capping bounces.

2. Intraday structure (2025-09-03)

• Opened near 1.31 and trended down all session, printing sequential lower highs: 1.35 → 1.175 → 1.154 → 1.14 → 1.12 → 1.10. LOD printed around 1.08 with slight after-hours stabilization at 1.09. That staircase lower high structure confirms intraday distribution and reinforces “sell-the-rip” bias into tomorrow.

B. Support/Resistance Mapping

• Immediate support: 1.08–1.10 (multi-month value edge and today’s intraday floor). Break → 1.05, then 1.02–1.03 (June pivot band) and psychological 1.00.
• Immediate resistance: 1.11–1.13 (today’s intraday supply shelf), then 1.15–1.16 (former balance ledge and 61.8% retrace of the post-spike dump), 1.20–1.25 (heavy overhead from 8/27–8/29).
• Volume-over-Price: Massive participation on 8/27 formed a thick supply zone above 1.20. Value acceptance has shifted back lower; overhead resistance layers are likely to reject first attempts higher.

C. Fibonacci and Mean-Reversion Context

• Swing low to spike high: 0.998 (2025-06-05) → 1.42 (2025-08-27), range = 0.422. • 38.2% retrace: ~1.259; 50%: ~1.209; 61.8%: ~1.159; 78.6%: ~1.089.
• Price is hovering right at the 78.6% retracement (~1.09). This is often the “last-ditch” Fibonacci support; a decisive break often leads to a full retrace toward the origin (1.00–1.03). Expect the first test to bounce modestly; if that bounce stalls below 1.15 and rolls, probabilities favor a breakdown retest.

D. Moving Averages and Trend Gauges (approximations from provided data)

• 5D SMA: Sloped down (recent closes: 1.37, 1.33, 1.10 → sharp negative slope), indicating short-term momentum bearish.
• 10–20D SMAs: Likely clustered near 1.10–1.13 given the month-long 1.07–1.12 range with the brief spike skewing up slightly; price has reclaimed below them, signaling bearish reversion.
• 50D SMA: Around 1.08–1.10 (most prices since June lived near that band). Price is currently at/just below; a decisive close beneath adds pressure for a 1.05 test.
• Slope summary: Short-term MAs rolling down, intermediate flat-to-down. This configuration supports “sell rallies” until price can reclaim and hold above the 20D area (~1.12–1.15).

E. Bollinger Bands (20D, est.)

• Bands expanded during the spike; now contracting while price rides the lower band near 1.08–1.10. Riding the lower band after a volatility expansion generally resolves with further grind lower or a weak bounce that fails under the mid-band (~1.18–1.20). Given the heavy overhead supply, a mid-band tag in the next 24h is less likely; base case is a bounce into 1.11–1.13 and fade.

F. Momentum Indicators (qualitative estimation)

• RSI(14) Daily: Likely mid-30s to low-40s after three red sessions; not deeply oversold, leaving room to the downside.
• 1h RSI: Spent a good portion sub-40 and hit oversold into the close; suggests scope for a reflexive bounce early tomorrow that should be faded if it stalls below 1.13–1.15.
• MACD (daily): Histogram likely turning negative post-spike; signal cross down aligns with the sell-the-rip bias.

G. Volume and Participation

• 8/27 volume 36.5M created significant trapped supply above current price. 8/28–8/29 still elevated but lower, consistent with distribution. Today’s 12.7M (partial/intraday) into the fade shows sellers in control.
• OBV (qualitative): Rolling over post 8/29; distribution signature.

H. VWAP Framework

• Anchored VWAP from the 8/27 spike likely sits around 1.25–1.28 (given most of the trading that day occurred above 1.20). Current price below anchored VWAPs from 8/27 and 9/2 implies sellers control the tape. Expect bounces toward 1.20 to fail on first attempt.

I. Market Microstructure (today’s “h” tape)

• Pre-market: 1.45 → 1.35 early weakness.
• Cash session: 1.31 open, immediate sell program with brief stabilizations that failed at progressively lower levels (1.17, 1.15, 1.14, 1.12). Late-late prints hovered 1.08–1.10 with small upticks after hours to 1.09–1.10. This pattern commonly precedes a morning pop to test the nearest broken shelf (1.11–1.13) before sellers reassert.

J. Pattern Diagnostics

• Blow-off top → Round-trip → Value rejection above → Return to old range. This forms a classic “failed breakout” or “bull trap” pattern. In such regimes, mean reversion occurs below the prior breakout base and rallies are supply.
• Candles: The last three sessions form a sequence of long-bodied red candles closing near lows (9/3: near LOD). Lack of lower shadow indicates demand exhaustion intraday.

K. Statistical/ATR Framing

• Recent daily ranges pre-spike ~0.02–0.03, post-spike ranges expanded to 0.06–0.10+, with an outlier day ~0.30+. Current ATR(14) estimated ~0.06–0.08. Using ATR bands, a 1-day move from 1.10 down to 1.04–1.05 or up to 1.16–1.18 is within 1x–1.2x ATR; thus a test of 1.06 is statistically reasonable in 24h, while a reclaim of 1.20 would be a 1.5–2x ATR outlier barring new catalysts.

L. Ichimoku (qualitative)

• Price below conversion/base lines and below an implied cloud region formed during the spike. Down-kumo bias; any bounce likely capped beneath the base line (~1.14–1.16 zone) initially.

M. Elliott Wave (heuristic)

• Spike as wave (A up), immediate retrace as (B) failed continuation, current leg presents as impulsive (C) down toward prior pivot (1.05–1.06). Expect 3–5 small subwaves intraday; we appear mid-impulse, allowing a corrective bounce before continuation.

N. Deviation and Reversion Tactics

• Reversion longs in the 1.06–1.08 pocket may scalp to 1.11–1.13; however, larger structure favors selling strength. Expect better reward-to-risk fading 1.12–1.14 than bottom-picking 1.08 given the supply stack.

O. Scenario Analysis (24h)

• Base case (60%): Early bounce to 1.11–1.13, stall, then trend down to 1.06–1.08 by EOD tomorrow.
• Bear extension (25%): Weak bounce fails under 1.11, breaks 1.08 with volume → 1.04–1.05 test intraday.
• Bull surprise (15%): Strong reclaim through 1.15, squeezes to 1.18–1.20; would require clear demand surge. Invalidate short if 1.16–1.17 holds on a 30–60m closing basis.

P. Risk Management (implementation guidance)

• Entry: Patience for 1.12 sell zone improves R:R versus chasing 1.10.
• Stop (discretionary): 1.17 (above 1.15–1.16 supply shelf and 61.8% retrace zone). That keeps risk ~0.05 for a 0.06–0.07 target → ~1.3–1.4 R.
• Take-Profit: 1.06 primary; scale optional 1.08 partial if bounce fades quickly.
• If price never bounces to 1.12: Optional “second-chance” entry on a failed rally at 1.11 after a 1.08 test/bounce (confirmation entry on lower high).

Q. Key Levels to Watch

• 1.08: Break → acceleration risk to 1.05.
• 1.12–1.13: First resistance/sell zone.
• 1.15–1.16: Stronger resistance; reclaim would force a rethink.
• 1.20+: Trend shift candidate if reclaimed and held (low odds in 24h absent news).

Conclusion and 24h Outlook

• The weight of evidence (failed breakout, intraday lower highs, MA/RSI/MACD alignment, Fibonacci 78.6% precarious hold, heavy overhead supply) favors selling strength. Expect a reflex bounce early, then a fade to retest 1.06–1.08 within 24 hours. Optimal tactical plan: short a bounce into 1.12 with a take-profit around 1.06.

Decision: Sell (Short)

• Open (Sell short): 1.12
• Close (Take-Profit): 1.06
• Invalidation (for risk control; not part of order output): 1.17 sustained reclaim.

Note: No guarantees; adapt to intraday tape. If the market gaps below 1.08 at open, wait for a weak bounce to re-enter rather than chase lows.