Anatomy of OIH Intraday
The above is 15 min chart. Green dotted lines represent potential support/resistance areas. The 1st two bars printed long upper tails with resistance at 5EMA. After breaking down, it tested the opening range low (ORL) with a bear flag. Unable to break, it then continued its fall steadily, reaching the 38.2% & 50% Fibonacci extension price target
Zooming into the 5 min chart above, if you hadn’t taken profit at the Fibonacci extensions, hammers appearing at the key level $155 would have prompted you to do so. Hammers at key levels are good indication of reversal.
Although this PUT option trade turned out nicely, there were 2 drawbacks:
1) Then entry point is not low risk, as the stop is placed at high of the 1st 2 bars, meaning a risk of $2 move on the OIH
2) The Natural Gas data which is released every Thurs at 10.30am ET (there was delay yesterday, released about 11.13am ET from Briefing.com) may have impact on OIH. That was the point where we see a test of ORL. It could have gone the other way and break back up of ORL
A nice reversal opportunity if you spotted it just before the 1.10pm ET bar as it broke the down trend line and also a resistance. Coupled that with the hammers I mentioned earlier, this is a high probability trade. It is always good to partial take just before round number, in this case $160. See that it did stalled at about $159.7 between 1.35pm ET to 2.10pm ET – this also happened to be where the 20EMA on 15 min chart is located. Always look at 2 different time frames when having day trades. OIH then went on to test the ORL again.