Study Guide for Come Into My Trading Room - Forex Factory

166 CASE STUDIES
Trade 1: Oracle Corp ORCL—Exit Answer
Chart A1-c
entry
long
A B C D E F
ORCL wasted little time before rallying above its moving averages. The
failure of the rally to reach the upper channel line lets you know that
the upmove is not likely to be very strong. The channel has been drawn
to contain the data during the decline in September. Back then, declines
used to punch the lower channel line. Now, the failure of prices to
reach the upper channel line shows that the rally is weak and profits
should be taken quickly instead of waiting for more, which you would
do in a powerful rally.
At point A, Force Index has completed a triple bearish divergence—
three lower tops during three uplegs of a rally. Prices still cannot reach
the upper channel line, making this a good spot to take profits and
employ your cash and attention elsewhere. The divergence deepens
at point B and gives a final ring at point C, after Force Index rises
above its centerline following the first nasty spill since the beginning of
the rally.
Overstaying a long trade in area C would have meant sitting through
an unpleasant decline below the EMA. That decline D actually creates