Today’s trade was an Oil Jan. contract with a sell order from a price of 51.49. The price had recently returned back to the major support level of the white line at a price of 51.50 as the Moving Average blue line was unable to cross significantly above the red line as denoted by the yellow X.
As the price moved back down to that level, the price had broken the Parabolic SAR red triangles and now had the resistance above of the Parabolic SAR green triangles to push the price downward. The yellow circled red bar that closed at its low is our sell signal as it is continuing the mini-trend of the previous four red bars that closed lower, each with a highside wick, signalling that the price couldn’t hold that high. We would enter the market with a sell stop order just below that bars low at a price of 51.49.
Once in the trade, the price immediately shot downward toward the first obvious price target of the major support/resistance level of the white line at a price of 51.00. From that point we would use the tops of each bar as our stop loss guide to lock in profit until the price stopped its wild swings in each bar as they finally consolidated into smaller bars.
At this point we would look to use the Parabolic SAR green triangles as our stop loss guide as the price approached our next obvious price target of the major support/resistance level of the white line at a price of 50.50. The price didn’t quite reach that level so at worst we should be stopped out in the yellow circle at a price of 50.79.
That would give us a profit of at least $700.