Yesterday, I traded this pattern by taking a long position in MU. Semiconductors had been acting weak for months, so stocks can rally hard once a move gets going. Micron has strong and obvious support around $5.20 as can be seen from the weekly chart:
Last week, the stock tested support and rebounded sharply. Key for this trade is the time a stock trades at or below support: if demand comes in at these levels, there should be a quick reversal. MU acted this way, which is why I bought. As usual, this is just a swing trade, so I expect price to be higher in the next one or two weeks. I do not care about the longer term perspective.
Disclosure: Covestor Model is long MU.
