Unity (U) Aftershock Trading: Capitulation Bounce Fading Into Heavy Supply (24h Bear-Bias Setup)

1) Market regime & structure (top-down)

Instrument: Unity Software Inc. (U)
Current price: $21.41 (latest snapshot ~21.26–21.41)

A. Higher-timeframe trend (Daily)

• Oct–early Dec 2025: Strong uptrend (36 → ~49–52). Momentum peak around Dec 11 (high near $52.15).
• Mid Dec–Jan: Distribution/rollover and then lower highs; price slips from mid-40s into low-40s.
• Jan 30, 2026: Structural break / capitulation gap-style dump: close $29.10 with huge volume (86.9M) and an extreme range (low $27.54).
• Feb 3–5: Continuation selloff to $22.88–$24.57 lows; then a reflex bounce.
• Feb 10: Bounce peaks at $29.06 (lower than pre-crash levels).
• Feb 11: Fresh crash leg to $18.80 intraday and close/last around $21.3–$21.4 with massive volume (102.4M).

Conclusion: The dominant daily regime is bear trend with repeated high-volume liquidation legs. Any long is currently a counter-trend mean reversion trade and must be sized/managed accordingly.

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2) Volatility & liquidity diagnostics

A. True range / realized volatility

• Recent daily ranges are extreme:
  • Feb 11: High 22.09, low 18.80 → range $3.29 (~15% of price).
  • Jan 30: Low 27.54 to high 38.03 → range $10.49 (enormous).
• This indicates elevated ATR and unstable order flow. Expect wide swings and wicky candles over the next 24h.

B. Volume confirmation

• The two largest volume events in the dataset are Jan 30 (86.9M) and Feb 11 (102.4M).
• Back-to-back “event” volumes typically occur near information shocks (earnings/guidance/news). The tape usually needs time to base.

Implication: In the next 24h, probability is high for continued volatility with failed rallies into overhead supply.

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3) Key levels (support/resistance, supply/demand)

A. Immediate supports

• $20.95–$21.00: Seen repeatedly in the hourly tape (21:00 bar low 21.00; multiple closes around 20.95–21.41). This is micro-support.
• $20.40–$20.45: Hourly consolidation area after the first bounce (15:30 close ~20.44; 16:30 open ~20.45). If $21 breaks, this is the next pivot.
• $19.45–$19.50: Major intraday reference (14:30 bar close ~19.45) and psychological.
• $18.80: Session low = capitulation low; if retested and breaks, downside can accelerate.

B. Overhead resistances (supply)

• $22.05–$22.10: Hourly high prints and rejection zone (18:30 high 22.10; 19:30 high 22.08).
• $22.65–$23.05: Midday bounce area (14:00 close 22.6855; 14:00 high 23.05). Likely heavy supply from trapped longs.
• $24.90–$25.20: Prior daily closes (Feb 4 close 24.94; Feb 6 close 25.11). Stronger resistance.
• $27.50–$29.00: The failed rebound zone (Feb 9–10). Now major overhead supply wall.

Level take: Price is below a thick stack of resistances; rallies are likely to be sold.

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4) Price action patterns (daily + hourly)

A. Daily candle context (Feb 11)

• Open near $21.41, high $22.09, low $18.80, last/close ~$21.41.
• This resembles a high-volatility hammer / long lower wick (intraday flush then rebound). On its own, that can be short-term bullish.
• However, in a strong downtrend, hammers often become bear-market bounces that retrace into supply then roll over.

B. Hourly sequence (Feb 11)

• 09:00–11:00: Trading around $29–$30.
• 12:00: Sudden breakdown (low ~21.2, close 21.79).
• 13:00: Massive whipsaw (high 30.13, low 20.43) indicating dislocated liquidity.
• 14:30: Big sell wave to 18.80, close 19.45, huge volume (48.9M).
• 15:30–18:30: Grind up 19.45 → 22.06 (short-covering + bargain hunting).
• 19:30–21:00: Fade back to ~21.15–21.30.

Interpretation: Classic capitulation → short-cover bounce → fade behavior. That usually leads to range/basing or a lower-low retest within 1–3 sessions.

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5) Indicator-based read (inference from closes)

(Exact indicator values require full computation; below are robust directional inferences given the magnitude of moves.)

A. Moving averages (trend)

• Price (~21) is far below the prior multi-week trading band (40s) ⇒ below 20/50/200-day MAs with high probability.
• That implies bearish trend alignment and “sell rallies” bias.

B. RSI / momentum

• The collapse from 29 → 21 in a day with a spike low to 18.8 implies oversold conditions intraday.
• Oversold can persist in waterfall markets; it more often predicts bounce potential than a durable reversal.

C. MACD / rate of change

• Large negative impulse after Jan 30 and again Feb 11 suggests negative momentum re-acceleration (bearish).

D. Bollinger Bands

• Volatility expansion and closes near the lower region suggest a band-walk risk downward, but with snapback rallies.

E. Volume Profile / VWAP logic (intraday)

• Heavy volume traded during the breakdown and bounce; a reasonable “event VWAP” is likely around $20.5–$21.5.
• Price ~21.4 is near that zone: if it fails to hold above VWAP, the market tends to mean revert lower (toward 20.4/19.5). If it reclaims and holds, it can squeeze toward 22.1–23.

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6) Scenario analysis (next 24 hours)

Given the regime (bear), event volatility, and overhead supply:

Base case (highest probability): Range-to-down bias

• Likely action: open near 21–21.5, attempt a push into 22.0–22.7, then selling pressure returns.
• Expected path: 21.4 → 22.1–22.6 (retest supply) → 20.4–19.5.

Bull case (lower probability): Relief continuation

• Requires acceptance above 22.7–23.1 with follow-through.
• Target would become 24.9–25.2. Given trend, this is less likely within 24h.

Bear case (meaningful risk): Retest and break of 18.8

• If 21 fails early and 19.45 gives way, a fast move toward 18.8 can occur.
• A clean break below 18.8 could trigger another liquidation leg.

Net forecast (24h): Downward drift / sell-the-rip, with large intraday swings. Bias: bearish.

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7) Trade decision (tactical)

Because the stock is in a clear post-capitulation bear trend with thick resistance overhead, the higher edge is to sell into a rebound rather than chase a fragile bounce.

Preferred setup

• Sell (short) on a bounce into resistance where risk can be defined.
• Best nearby trigger zone: $22.00–$22.60 (first major supply cluster). If price never bounces there, a secondary entry is a breakdown under 21, but that’s lower quality due to chasing volatility.

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8) Risk-aware targets (take-profit logic)

• First profit zone sits at $20.45 (intraday pivot / likely mean reversion).
• Deeper profit zone at $19.50 (key intraday reference). For a single close price target, I’ll set the take-profit closer to the higher-probability first zone.

Prediction summary: expect attempts to bounce, but net lower by the end of the next 24 hours unless price reclaims and holds above 23.1 (less likely).