Today’s trade was an Oil Jan. contract with a sell order from a price of 50.57. The price had been moving in an overall downwards trend until it started to move back and test the Moving Average blue line.
The yellow circled red bar is our sell signal as that is a large bar that closed at its low reversing the mini-trend of the previous ten bars that were unable to stay above the Moving Average blue line. We would place a sell stop order just below that bar to enter the market at a price of 50.57.
Once in the trade we would look for the price to hit and break through the obvious price target of the major support/resistance level of the white line at a price of 50.50. From that point we would then look for the price to reach the next obvious price target of the major support/resistance level of the white line at a price of 50.00.
Once that price level was reached, we would see that the price had just barely reached that level in the first two bars so we should look to exit the trade inside the yellow oval.
That would give us a profit of $570.