Entry time: 10.49 EDT.
Exit time: 11.46 EDT.
Entry price: $23.71.
Exit price: $24.15.
Strategy: Reversal long.
Net profit: 41 cents/share.
Criteria for taking the trade:
1. The market is in uptrend in the short term (SPY daily chart below).
2. JCP has visited a strong support (daily chart below) and it stopped exactly at its lower point. The possibility of a reversal here was quite high because the stock was visiting for the first time a strong support.
3. We entered the trade using the hammer candlestick pattern (below) in the 5 minutes chart and put the initial stop below the low of the candlestick ($23.57).
4. In the 2 hours chart the market (SPY) is visiting for the first time a prior resistance which is now a support (below), so the possibility of a short term reversal is high.
We exited using a market order because we have to leave and couldn’t stay on line to manage the trade. A proper risk management could have produced a profit of almost $1/share.
En
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