TREX: Breakaway Gap Bounce Likely to Fade — Short the First Pop Toward 33.5

Summary and context

• Instrument: Trex Company, Inc. (TREX)
• Currency: USD
• Current price: 32.97
• Key recent action: A massive breakaway gap down on 2025-11-05 from prior close 47.04 to open 34.00, intraday high 37.24, low 32.14, close 32.43 on extreme volume (~24.37M vs ~1–2M typical). Follow-through: 11-06 small down day to 31.92, 11-07 rebound to 32.97 with intraday high 33.24 on still-elevated volume (~6.6M).
• Time horizon of forecast: next 24 hours (next US trading session).

Price action and market structure

• Regime shift: The 11-05 gap is characteristic of a breakaway gap (post-earnings or guidance shock), typically ushering in a new lower trading regime with persistent overhead supply. Such gaps rarely fill quickly.
• Lower-lows and lower-highs: From early September through late October, TREX transitioned from the mid-60s to low-50s, then broke again to the low-30s. This is the second leg down in a larger downtrend.
• Immediate levels:
  • Resistance 1: 33.10–33.50 (11-07 high 33.24; round number 33; prior anchored VWAP resistance cluster, see VWAP section).
  • Resistance 2: 34.00–34.80 (11-05 open 34.00; sellers appeared repeatedly in this zone intraday on the gap day).
  • Resistance 3: 37.20–37.80 (11-05 high 37.24; 23.6–38.2% retracement zone of the 47.04 to 32.14 collapse).
  • Support 1: 31.20–31.40 (11-06 low 31.21; prior day close 31.92).
  • Support 2: 30.00 psychological.
• Candlesticks: 11-05 printed a very large red candle with minimal recovery; 11-06 a small-bodied consolidation with a higher low relative to the capitulation low; 11-07 a green day making a marginal higher high versus 11-06 but failing under 33.25. This sequence fits a classic post-gap two- to three-day relief bounce that often fades.

Trend and moving averages

• Short-term SMA(5) ≈ 38.5 (estimated from last five closes 47.94, 47.04, 32.43, 31.92, 32.97). Price at 32.97 is far below, confirming powerful short-term downtrend.
• SMA(20) estimated in the low-50s; SMA(50) in the mid to high-50s; SMA(200) much higher. All major moving averages are overhead and downward-sloping. This creates a thick supply overhang on any rally.
• EMA alignment (estimated): EMA(8) < EMA(21) < EMA(50), all above price, confirming a bearish impulse regime.

Momentum oscillators

• RSI(14) estimate: Oversold immediately after the gap (<30); likely rebounded to low-30s by 11-07. This is a weak bounce from oversold, consistent with bear trend continuation rather than a full mean-reversion.
• Stochastics: Likely exited deep oversold to neutral-low readings; no confirmed bullish crossover through midline yet.
• MACD: Deeply negative; histogram likely ticking up slightly due to the two-day stabilization, but signal remains below zero. In bear regimes, such early MACD upticks tend to be sold.

Volatility and range analysis

• ATR(14) expanded sharply due to the gap day. A practical near-term daily ATR estimate is 1.7–2.2. Using mid ≈ 1.9, the expected next-session range from 32.97 is roughly 31.1 to 34.9, barring new shocks.
• Bollinger Bands (20,2): Mid-band far above price (around low-50s pre-gap), bands blown wide post-gap; price is riding the lower band zone. Until price can reclaim and hold above 34–35, expect band-walking behavior typical of strong downtrends.

Volume and participation

• Giant capitulation-like volume 11-05 (24M+) versus typical 1–2M indicates a repricing event with significant institutional activity.
• 11-06 and 11-07 volumes remain elevated (7.26M and 6.61M), consistent with ongoing redistribution rather than accumulation.
• OBV (qualitative): Steep decline; no base-building accumulation evidence yet.

Anchored VWAP analysis

• Anchored VWAP from the shock day (11-05) likely sits near the mid-33s (approximation given the session’s VWAP skew by heavy early prints around 33–35 and close at 32.43). Price at 32.97 is modestly below this; rallies toward 33.3–33.8 should invite supply. That band aligns with visible resistance (33.1–33.5) and offers a technically clean, low-friction short entry area.

Fibonacci mapping

• From pre-gap close 47.04 to 11-05 low 32.14: key retracements
  • 23.6% ≈ 35.65
  • 38.2% ≈ 37.83
  • 50% ≈ 39.59 Price has only bounced to 33.24 so far, not even reaching 23.6%, signaling weak buy interest and strong supply above.

Market profile and supply-demand zones

• Overhead supply started forming between 33 and 35 from 11-05 onward. Expect many trapped longs from 40–50 to sell into strength. This suppresses rally extensions and supports a sell-the-pop framework.
• Demand is thin until 31.2; if that breaks, 30 becomes a magnet.

Pattern diagnostics

• Breakaway gap down with a two-day consolidation: often resolves with a retest of the post-gap low or a marginal lower low before any durable base attempts.
• Short-term bear flag potential: 11-06 to 11-07 upward drift within a narrow channel under 33.5 is consistent with a flag that can break lower into 31s.

Probabilistic path for next 24 hours

• Base case (60%): Early push into 33.3–33.6 meets supply; reversal day finishes red, probing 31.7–31.3. Close near 31.6–32.2.
• Bull case (30%): Strong relief rally squeezes through 33.6 to test 34.2–34.8 (upper ATR bound, prior open). Likely stalls below 35; not enough to change trend.
• Bear tail risk (10%): Immediate risk-off tape sends price straight through 31.2 support to test 30.0–30.5.

Confluence for a tactical short

• Resistance cluster: 33.1–33.5 (local high, round number, anchored VWAP, supply node).
• Momentum: Weak rebound from oversold; MACD negative; RSI sub-40 in downtrend.
• Trend/MAs: All major MAs overhead; rallies are opportunities to sell.
• Volume: Elevated and skewed to distribution; no accumulation footprints.
• Fib: Bounce has failed to reach even 23.6% retrace; sellers dominant.

Execution plan (1-session tactical)

• Primary plan: Sell strength into 33.45 (limit), aiming for a push back to 31.30 where buyers showed up before. This targets a retest slightly above the 11-06 low (31.21) to front-run bids.
• Risk management (for context): A logical invalidation sits above 34.60–34.80 (break above supply band and toward 11-05 open). That would indicate a stronger squeeze.
• Reward-to-risk (illustrative): Entry 33.45, target 31.30 yields +2.15; with a tactical stop concept at 34.65 (not an order here) risk 1.20; R:R ~1.8. Improves further if late-day momentum extends to 31.0.
• Alternate trigger if no pop: If price fails to rally and instead breaks below 32.40 early with rising volume, continuation shorts are viable intra-day toward 31.50–31.30, but the ideal entry remains selling a pop into the 33s.

Indicator-by-indicator readout and influence on the call

• Price action: Breakaway gap and lower highs favors selling rallies; dictates short bias.
• Moving averages: Multi-timeframe bearish stack; favors continuation; argues against swing longs.
• RSI/Stoch: Only weak mean-reversion; not enough to overcome supply; supports shorting into resistance rather than fading weakness.
• MACD: Negative with only a minor histogram uptick; consistent with distribution-phase bounces.
• Bollinger/ATR: Expanded volatility; expected range allows both 33.5 test and 31.3 test in one session; gives room for a scalp-to-swing short.
• Volume/OBV: Distribution heavy; lack of accumulation tilts probabilities to the downside after small bounces.
• Anchored VWAP: Resistance band 33.3–33.8 is a high-probability sell zone.
• Fibonacci: Failure to reach even shallow retracements confirms weak buyers.

What would change my mind in-session

• Strong breadth and tape, sustained hold above 34.80 with volume rotation would signal squeeze potential to 35.6–37.2; that would invalidate the near-term short thesis.

24-hour price prediction

• Likely high: 33.4–33.7 (sell zone)
• Likely low: 31.1–31.4 (target zone)
• Likely close: 31.6–32.2 (red-to-neutral day)

Bottom line

• In a fresh bearish regime with a modest two-day bounce into layered resistance and no accumulation footprint, selling a rally toward 33.5 offers the best asymmetric setup for the next session. Target a retest of 31s, just above the post-gap low, within the expected ATR.