Please refer to the hourly candlestick chart of the E-Mini S&P 500 above.
While it is well-known that one buys the bottom of the channel, where
are the reference points. We need two -
1. A buy trigger point somewhere above the bottom of the channel.
2. A stop loss point somewhere below that and coinciding with the bottom of the channel.
We also need the standard bull trend situation where 3 SMA's are all
rising in concert and in the direction of the trend.
In the chart above, this situation develops from 4/29.
The trade is as follows-
1. Buy the instrument on 4/30 at the 40 SMA.
2. Set trailing stop at the 60SMA - 40SMA difference ( 6.25 points )
3. Take profit at the upper end of the channel ( about 26 points above entry )
and readjust each day.
The risk-reward ratio is a handsome 4-1 or better.
