Today’s trade was an Oil Jan. contract with a buy order from a price of 52.49. The price had been moving in an upwards trend since the yellow X where the Moving Average blue line crossed above the red line.
The two yellow circled green bars that closed near their highs are our buy signal as those bars are going with the overall trend and have the added support of the Parabolic SAR red triangles very close below. The price had also already broken the major support/resistance level of the white line at a price of 52.50 so it was looking ready for a big break through.
We would place a buy stop order just above these bars at a price of 52.49. Once in the trade we would look for the obvious price target of the major support/resistance level of the white line at a price of 53.00. Then we would look to follow the price with a stop loss order underneath each bar as it closed while the price continued up through the next major support/resistance level of the white line at a price of 53.50 and finally to 54.00.
The red bar right before the price reached the 54.00 level signals to us that the price move could be coming to an end, so at that point it would have been smart to place a sell limit order above the price at 54.00, waiting for the price to hit and be stopped out.
Otherwise we could follow the Parabolic SAR red triangles as our stop loss guide and then we would have been stopped out a little bit later and lower at a price of 53.60.
That would give us a profit of at least $1100 and as much as $1500 in a single trade on a single contract!