Earnings Bearish

Strategy Name: Earnings Breakdown

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Strategy Description: Earnings Breakdown is a precision short-selling strategy tailored to capitalize on high-impact downside moves, particularly in the wake of severe earnings disappointments. Built on 60-minute bars, this strategy identifies deeply oversold conditions with strong bearish volume flow, signaling a high-probability continuation of the downtrend. It’s ideal for traders seeking to profit from panic-driven selloffs or systematic re-pricing of company outlooks following poor performance.

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Core Setup:

Bearish Breakdown Conditions:

• Price Breakdown: Current price is below the lower Bollinger Band, indicating price is in a volatility-expansion phase to the downside.

• Momentum Confirmation: RSI (14) is less than 30, signaling an oversold and bearish momentum regime.

• Volume Confirmation: On Balance Volume is less than 0, confirming that selling pressure is dominating.

Profit Target & Risk Control:

• Take Profit: +1.5%

• Stop Loss: -1.5%

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A conservative 1:2 risk-reward structure provides protection in volatile markets while allowing the strategy to ride heavy downward momentum.

Ideal For:

• Traders looking to capture short-term downside continuation in stocks reacting to negative earnings surprises

• Automated strategies scanning for oversold, high-volume breakdowns on hourly timeframes

• Bearish setups in single names with significant institutional selling pressure

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Earnings Breakdown is purpose-built for traders who want to short into weakness, not guess tops. It offers a systematic approach to identifying accelerated downside setups and executing with conviction when the tape turns red.

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Next steps:

1. Make this strategy your own – click here to customize to suit your preferences.
2. Try this strategy on a different asset or timeframe -

   1. Navigate to the “Create” menu on the homepage, choose your preferred asset and timeframe, then choose “Copy” to duplicate the strategy.

   2. From there, backtest and deploy whenever you're ready.

   3. Reach out to the Level2 team with any questions or if you need tech support

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The template strategies provided on Level2 are for educational and illustrative purposes only and do not constitute investment advice or a recommendation to trade. These strategies are based on historical examples and are not tailored to your individual financial circumstances, objectives, or risk tolerance.

Before deploying any strategy, you must run a back-test using your chosen security. Strategy performance can vary significantly depending on the asset class, time frame, volatility, and broader market conditions. It is essential to adjust parameters such as entry/exit levels, indicators, and time frames to suit the specific security and current market dynamics.

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