High conviction short idea: iRobot

IRBT has caught the attention of plenty of investors in 2013 with it's meteoric rise from the high teens to nearly 40.  However, the technicals are cracking at a major resistance level.  Price appears headed for a significant decline.

The current intermediate pattern in play is this bullish bat harmonic.  The potential reversal zone (where we can look to buy it) is around the April gap at 26.  This can serve as our downside target.  Note this idea is invalidated over the September highs.

We can see relative strength and momentum have clearly diverged on this last push higher.

Zooming out to the all time IRBT chart.   As noted on the chart, bats tend to occur at critical levels. 

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