Wolfspeed (WOLF): Dead Cat Bounce Exhausted – High-Conviction Short Opportunity to $1.25

Detailed Technical Analysis of Wolfspeed, Inc. (WOLF)

1. Price Action & Trend Analysis

• Daily Trend: WOLF has experienced a dramatic downtrend from March highs (above $6.00) all the way below $1.00 in late June, followed by an equally dramatic reversal back above $2.50 in early July, before quickly retracing to the $1.39 region.
• Recent Price Stability: The last three trading sessions (July 15-17) show the price consolidating in the $1.39-$1.55 range, with reduced volatility compared to the wild swings from early July.
• Volume Analysis: Volume spikes (e.g., 461M shares on July 7, 293M on July 8, and still-considerable 67M on July 11) point towards capitulation followed by short-lived speculative bounces. More recently, volumes have normalized (e.g., 21M during July 17 session), indicative of a stabilization but with watchful sentiment.

2. Volatility Analysis

• ATR (Average True Range): Over the last 20 sessions, ATR is extraordinarily elevated due to sharp moves (up to 60-80% daily swings), but recent ATR readings (extracted from late July's consolidation) are falling – a hallmark of volatility compression typical before a breakout or further breakdown.

3. Candlestick Patterns

• Reversal Signals: The extreme tail on July 1 ($0.40 low to $0.79 close, then explosion to $2.31 on July 7) signifies a volatility climax and exhaustive selling. However, the failure to sustain levels above $2.50 by July 8-10, and subsequent rapid retracement to $1.40, forms a complex bearish engulfing sequence and reveals strong overhead supply.

4. Support & Resistance Levels

• Major Resistance:
  • $1.55-$1.63: Multiple intraday and closing highs including July 16-17.
  • $2.00-$2.30: Next supply zone shaped by the July 7-10 surge and crash.
• Key Supports:
  • $1.25: Former breakdown level, retested several times across June and July.
  • $0.79-$1.00: Psychological and technical base from the July 1 and June 27-30 lows.

5. Moving Averages

• Short-Term (5/10-day) MAs: Steep downward sloping, with price recently attempting to stabilize around the 10-day mark, currently near $1.39-$1.45. However, the inability to reclaim and hold above recent short-term MAs signals persistent downside pressure.
• Longer-Term (20/50-day) MAs: Well above current price, confirming the dominant bearish trend.

6. Momentum & Oscillators

• RSI (14-day, est.): Likely rebounded from extreme oversold (sub-25) during late June to near 40-45 now, but stalling without strong recovery. This suggests that the bounce was corrective and not trend-reversing.
• MACD: Still negative and below the zero line, demonstrating ongoing bearish momentum. Any bullish MACD cross was weak and fizzled out alongside the failed recovery above $2.30.

7. Volume Analysis & Accumulation/Distribution

• On-Balance Volume (OBV): After a sharp collapse, OBV failed to expand on bounces, indicating the July rally was not broadly accumulated by institutional buyers, but rather fueled by short covering and speculation.

8. Gap Analysis

• Unfilled Gaps: There is an extensive gap from $3.13 (July 3) to $2.31 (July 7 open). Failed attempts to close these gaps are typically bearish, reinforcing the negative sentiment.

9. Market Structure/Elliott Wave Perspective

• Capitulation and Dead Cat Bounce: The violent down-move and failed snapback fit a classic bear market pattern of capitulation followed by a sharp but unsustainable "dead cat bounce," usually succeeded by a period of sideways action before the next move.
• Current Structure: The market is showing classic bear flag/consolidation after breakdown structure, with consolidation below key resistances.

10. Order Flow & L2/Time-of-Sale Dynamics

• During July 17: Consistent selling pressure on upticks during the intraday session. Where bids emerged near $1.39, resistance at $1.41-$1.43 was quickly met with sellers.
• Large Size at Lower Bids: Weak attempts to form higher lows are met with block offers, suggesting supply is not fully exhausted and the path of least resistance remains lower, possibly towards previous support around $1.25 or even $1.00.

11. Sentiment, News & Fundamental Overlay

• No Clear Fundamental Catalyst for Recovery: The near total obliteration from $6+ to sub $1 suggests either existential threats, sector-wide collapse, or catastrophic earnings/news. The absences of immediate upside triggers make bear rallies highly unreliable.

12. Probabilistic Forecast – Next 24 Hours

• Bearish Bias: The confluence of failed recoveries, heavy resistance above $1.40, an exhausted short-term rally, and macro downtrend all imply weaker price action in the immediate future.
• Expected Price Path: A range of $1.30-$1.55, with high risk of a break below $1.39 (current price) leading to a re-test of $1.25 or lower if $1.39 fails as support.

13. Trade Plan – Execution & Risk Management

• Short Entry (Sell/Short Position): Ideal entry is slightly above last stabilization, targeting $1.43-$1.45 where resistance repeatedly capped bounces this session.
• Profit Target: First target is $1.25 (nearest demand/support zone from recent weeks), with further extension possible to $1.00 on momentum.
• Stop Loss: For risk management, a disciplined stop should be placed above $1.55, which would invalidate the immediate bear thesis if recaptured.

14. Combinatorial View (Synthesis)

- All major indicators (trend, price structure, volume profile, momentum, and order flow) point to a high-probability further downside move. Odds strongly favor a continuation to retest the $1.25 support and possibly lower barring unexpected news.

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Conclusion: High-conviction short (Sell) setup with optimal entry at $1.42, target $1.25, and a close monitor for volume confirmation during breakdown.

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