Today’s trade was an Oil Jan. contract with a buy order from a price of 50.49. The price had recently moved back towards the major support/resistance level of the white line at a price of 50.50 from the other major support level of the white line at a price of 50.00.
The yellow circled green bar is our buy opportunity as that bar is reversing the mini-trend of the three previous bars that tested the major support/resistance level of the white line at a price of 50.50 and the price had also tested the support level of the Parabolic SAR red triangles below the price.
Once in the trade, the price continue to bounce along either side of the major support of the white line at 50.50 like it was a magnet. If we followed our rules of where to initially place a stop loss order to limit losses then it would be placed somewhere around the flat purple line. That red bar low acted as our guide and the green bar later, tested that level but never broke it.
When the price finally broke upwards, we would now move our stop loss order up underneath each bar as it closed and and that would have us stopped out under the first bar that broke the major support level of the white line at a price of 51.50 or we could have set a sell limit order ahead of time at the price inside the yellow circle.
Otherwise, if we used the Parabolic SAR red triangles as our stop loss guide, then we would be stopped out a little later and a little bit lower at a price of 51.20.
That would give us a profit of between $700 and $1000.