Today’s trade was an Oil Feb. contract with a buy order from a price of 51.67. The price had been moving in a sideways channel until it moved down to test the major support/resistance level of the white line at a price of 51.50.
The yellow circled bar that closed at the same price as its open is our buy signal as that bar’s long downside wick and the previous three bars had tested the Moving Average blue line after the the price had broken the Parabolic SAR green triangles. That gave us the additional support of the Parabolic SAR red triangles now below the price to go with the overall trend upwards when the Moving Average blue line crossed over the Moving Average red line, as denoted by the Yellow X.
The price had also tested the major support/resistance level of the white line at a price of 51.50 with three consecutive red bars that all had downside wicks that could not hold under that level. So we would place a buy stop order at a price of 51.67, just above the close of our buy signal bar.
Once in the trade and the price started to move sideways with two red bars, we would have our stop loss order to lock in profit just under those bars. We could place a sell limit order up at the obvious price target of the major support/resistance level of the white line at a price of 52.00 which would have been triggered in the small yellow circle.
That would give us a profit of $330.