Today’s trade was an Oil Jan. contract with a buy order from a price of 53.52, The price had been moving sideways until it slowly moved upwards and broke through the major support/resistance level of the white line at a price of 53.50.
The yellow circled green bar is our buy signal as that bar closed near its high with a downside wick that tested the Moving Average blue line while staying above the major support level of the white line at a price of 53.50. It is also reversing the mini-trend of the previous four bars while staying with the overall upward trend since the yellow X and has the added support of the Parabolic SAR red triangles below the price.
There was an earlier opportunity to enter the market with a buy order from the small yellow line but the Moving Average blue line and red line had just started to separate and the mini-trend it was reversing was only two bars so the later signal is much stronger. We would place a buy stop order at a price of 53.52.
Once in the trade we would look for the price to hit the obvious target of the major support/resistance level of the white line at a price of 54.00. When that level was broken we would look to move our stop loss order up to lock in profit, either under each bar as it closed or following the Parabolic SAR red triangles.
That would give us a profit of at least $500