Today’s trade was an Oil Feb. contract with a sell order from a price of 45.38. The price had been moving in a generally sideways channel until it had recently tested the low of the major support level of the white line at a price of 45.00 and back up to the other major support/resistance level of the white line at a price of 45.50.
The yellow circled red bar is our buy signal as that bar is reversing the mini-trend of the four previous bars that had tested the lowest price at that level. It also couldn’t hold the price above the major support/resistance level of the white line at a price of 45.50 that it had crossed and was still going with the overall downwards trend as the Moving Average blue line had crossed below the Moving Average red line, as denoted by the yellow X.
We would place a sell stop order just below the low of that bar to enter the market from a price of 45.38. 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 45.00 that it had just recently reached.
Then as the price quickly moved lower, if we did not go flat to exit the trade then we should have a stop loss order following the top of each bar down as it closed. This would have us stopped out at a price of 44.90 inside the yellow circle.
That would give us a profit of at least $480.