Short selling a stock ?
First of all lets understand what short selling actually means.It is the practice of selling securities,which is borrowed from third party and in a hope to buy that security back at later date to return to lender.If the price of security decreases then the person(short seller) will be in profit and if the prices move on then he will be in loss.
It is just opposite of going in long position where the purchased buys a stock,believing that prospects for the company are good and the stock will raise.While in short selling seller thinks that the market price of share is in overbought condition and he can make profit by selling it now and then cover back it after some time.
Following technical indicators can be useful in finding short sales moves.
You have to find an overbought situation or a trend that is reliable.You can use these tools to find overbought situation.
Relative strength index (RSI)
Stochastic oscillator
short-term moving average
These oscillator,can help traders in finding the limit of the prices and also when the market will run out of buyers.You also need to set your stop loss for your short selling. When you place stop for short selling you have to place it above the entry price. You may place it few ticks over previous resistance, or place it few ticks above highest price of the day if you are swing traders.The danger of short selling arises when short sellers buy to cover their losses, the price continues to rise, triggering more short sellers to cover their losses, etc