Study Guide for Come Into My Trading Room - Forex Factory

174 CASE STUDIES
Trade 3: Kroll Inc KROL—Exit Answer
Chart A3-c
entry
long
A B C D E F G
The first selling opportunity in KROL comes in the area A, where the
stock penetrates its channel, while Force Index traces a bearish divergence.
There is a great reentry opportunity in area B, when KROL
returns to its fast EMA. We need to calculate this EMA daily, estimate its
value for tomorrow, and put our buy order in that area.
The rally in area C offers us a choice—take profits above the envelope
or continue to hold because peak C of Force Index is even higher
than peak A. When bulls grow stronger as prices rise, they tell us that
higher prices are likely ahead.
The pullback to the EMA in area D presents another good opportunity
to reestablish long positions or to add to existing ones. The rally in
area E creates the best exit opportunity for longs—bearish divergence
C-E of Force Index shows that bulls are running out of steam, while the
failure of prices to reach their upper channel line confirms this message.
MACD-Histogram also traces a bearish divergence, in tandem with
Force Index. It is the end of the game for the bulls, the bells are ringing,
warning you that the uptrend is ready to reverse.