How do you know when the dead cat bounce will happen? If you get it wrong, people say "that's what happens when you try to catch a falling knife."
You dont know, but if price cant break above and close the previous high, then it usually will test lows, and most likely break and fall lower. It's all a matter of analyzing swing highs and lows.
Here is a good example. Cat failed to break and close above 72, but instead tested and broke lows. Fibs are great at this. In fact we had a nice resistance point ay 68...so if cat failed to break and close above 68, id short. If it closed above, I'd wait for a retrace and go long, or buy small size at the 68 level, and buy more when it fell. as they say buy dips and sell rallies, short rallies and buy dips.
Another way I knew this had a good chance of going lower was because cat broke all its previous fib supports from the last up trend, so any push upwards would be a nice short trade. also in the first pic, notice momentum was still negative at the time the retrace up accured...also a nice indication trend will continue down. in THIS pic, ignore the 28 and 75% fibs, I only use those for stops and not for s/r...here price broke support.
Here is a possible dead cat bounce that hasn't played out yet. We broke and closed below support, and now pushed up. we might even test 21.80 near the blue line. Notice that also momentum is again bearish, but dont put too much importance on momentum.
I doubt anyone would not do the same thing - if they were in his shoes. It's all about expanding your business, I guess.....