Today’s trade was an Oil Jan. contract with a sell order from a price of 53.43. The price had been in an overall downward trend until it hit the major support level of the white line at a price of 53.00 and then came back towards the Moving Average blue line and red line and the other major support/resistance level of the white line at a price of 53.50.
The yellow circled red bar is our sell signal as it has a high topside wick and is reversing the mini-trend of the last nine bars, while continuing the overall trend. It also tested the major support/resistance level of the white line at a price of 53.00 and the Moving Average red line without closing above them. We would place a sell stop order just below that bar at a price of 53.43.
Once in the trade our price target would be to return to the major support level of the white line at a price of 53.00. When that level was broken and the consecutive red bars ended with a green bar, that is signaling a possible end to the price move and we would be looking to exit the trade somewhere in the yellow circle.
That would give us a profit of around $600.