FSLY Post-Explosion Reversal: High-Volume Spike Looks Ripe for a 24H Mean-Reversion Pullback

Market regime & context (Daily + Intraday)

Instrument: FSLY (Fastly, Inc.)
Current price: $16.04 (latest prints clustered $16.0–$16.4)

1) Multi-timeframe trend read

Daily trend (Oct 2025 → early Feb 2026):

• Price spent months in a broad base / downtrend-to-sideways zone around $8.5–$12.5, with repeated failures near the low-$12s (Nov–Dec).
• Then a sharp selloff into early Feb (down to ~$7.96 close on 2/5), followed by a modest rebound to ~$9.31 (2/11).
• 2/12 is a structural break: daily candle shows Open ~13.49, High ~17.86, Low ~13.40, Close ~16.04 on ~115M volume—a massive gap and expansion day. This is a new regime versus the prior $8–$12 range.

Implication: The prevailing long-term downtrend has been interrupted by an event-driven markup. After such a vertical move, the next 24h typically shifts to high-volatility digestion (pullbacks, range, potential second leg) rather than smooth continuation.

2) Volume, volatility & “event candle” interpretation

• Volume spike: 115M vs prior days mostly 2–8M (except 16.9M on 2/11). That’s classic capitulation/ignition volume.
• True range expansion: Daily range ~ $4.46 (17.86–13.40) = ~28% of close—extreme.

Playbook effect: After an ignition candle, price often:

1. retests the breakout zone (prior resistance / VWAP bands), or
2. forms a bull flag and continues, or
3. fades materially if move was largely squeeze-driven.

Given the intraday sequence (see below), the tape looks more like blow-off then consolidation, increasing odds of a near-term retrace.

3) Intraday structure (hourly/30–60m behavior)

Key intraday legs on 2/12:

• Launch: 13.49 → 15.60 (first impulse)
• Grind up: 15.17 → 16.46 → 16.77
• Final push: 16.72 → 17.64 → 17.86 high
• Sharp reversal: 17.51 → 16.05 low within the 19:30 bar (very large red impulse)
• Late stabilization: ~16.0–16.4

Interpretation:

• The move printed a climactic high (~17.86) followed by an aggressive rejection.
• Late-session stabilization near ~$16 suggests buyers defending, but the inability to reclaim >$17 after rejection indicates supply overhead and likely mean reversion before any sustainable trend.

4) Support/resistance mapping (price-based, no assumptions)

Immediate resistance (overhead supply):

• $16.40–$16.80: late consolidation + lower high attempts
• $17.50–$17.90: rejection zone / day’s top tail

Immediate support:

• $15.85–$16.05: intraday base after the dump; breakdown level
• $15.10–$15.35: earlier consolidation (15:30 bar region)
• $13.40–$13.60: day’s low / gap launch area (major “line in the sand”)

5) Momentum (RSI-style inference) & mean reversion pressure

While exact RSI isn’t computed here, the price action implies:

• Pre-2/12: depressed momentum after falling into $8s.
• 2/12: vertical surge likely pushed short-term oscillators deep overbought, then partially reset on the sharp pullback.

Net: For the next 24 hours, momentum is fragile—more consistent with range-to-down than clean continuation up, unless price quickly reclaims and holds above ~$16.8–$17.0.

6) VWAP / Fair value logic (event day)

On a day with massive volume and a late fade, anchored VWAP from the day’s open typically becomes a magnet. With trading spanning 13.4–17.9 and closing 16.0, fair value is often below the peak. If price opens weak or fails to regain mid-$16s, traders often rotate price back toward volume-weighted value, frequently producing a retracement into prior consolidation bands (15s).

7) Pattern recognition

• Blow-off top / buying climax: new high + very large volume + sharp reversal.
• Potential bull flag is possible, but not confirmed: we would need tight consolidation and a reclaim of ~$16.8–$17 with improving tape.

Given the immediate reversal from 17.86 to ~16.0, the higher-probability 24h pattern is post-spike consolidation with downward bias.

8) 24-hour forecast (probabilistic)

Base case (higher probability):

• Choppy trade with lower highs under 16.8–17.5.
• A retest of $15.10–$15.40 is likely; a deeper flush could probe $14.50–$14.80 if risk-off accelerates.

Alternative (lower probability but relevant):

• If price holds above ~$15.8 and reclaims $16.8–$17.0, a squeeze continuation could target $17.5–$17.9 again.

Given the violent rejection and extreme range, I weight the next 24h toward mean reversion / pullback rather than immediate continuation.

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Trade decision (next 24h)

Decision: Sell (Short) — aiming to capture post-ignition retracement.

Optimal short entry (open price)

Because volatility is extreme, chasing at $16.04 is not optimal. Prefer selling into resistance:

• Open (short) around: $16.65 (sell-the-rally zone below 16.8–17 resistance)

Take-profit / close price

• Close (take profit) at: $15.20 (first strong demand zone from earlier consolidation)

This targets a typical post-spike pullback into the mid-$15s while avoiding the need to predict a full gap fill.

Risk note (not requested but critical with this volatility): a decisive reclaim above ~$17.10–$17.30 would materially weaken the short thesis (continuation risk).