Strategy Description: Stocks that have temporarily peaked don't just fade off in one wave (provided the original up wave was strong enough). They will likely find some support somewhere, have a little bounce before either continued fade before the next leg higher.
In general the bigger the pulback, the better the risk-reward, but the lower the probability. That being said, buying support is such low risk that most times it will be good reward.
In this case on CYH the opening move was pretty big, over 1ATR, and it was relatively consistent; allbeit a bit move. After a strong move want to be looking for a spot to get a re-entry into the predominant trend. As a general guide vwap is a good spot, however it is not a definitive spot.
Note that this is a different play to buying a dip within a consistent trend. This is one where the dominant trend has become overextended and looking to buy a pullback. It should be a profitable strategy, even if it doesn't resume the trend. This is because you should end up with a really solid entry, and be able to take off some risk pretty quickly into a pop. Either that or at the very least it is very well defined risk.
The key here to provide liquidity on the way down. It is possible to add on favourable price action... But you don't really want to add too much because the key is to focus on the solid entry, rather than play the momentum.
In this case there are two support lines. VWAP is around 28.60 as it was coming down, so it was a relatively decent breach of vwap; but still only a 1/6th of ATR breach. A good entry around $28, risking 20c would have caught nearly a $1 bounce.
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