Current state of affair: S&P500 testing 1108 resistance. Oil testing 77.50 resitance. EUR/USD testing 1.2350 resistance. USD/CAD marking higher bottom at 1.0280, low of day was 1.0260. I am shorting oil (HOD.TO) here because it looks like that the rally is non-sustainable in the short term as we are testing resistances across the board within a longer term downtrend. Moreover, the reward/risk is good at this point since the stops are clear (e.g. the various resistance price levels in first paragraph). Figure 1 is the long term chart of U.S. DB Oil Fund (DBO). It shows DBO is at the top of a congestion zone in a longer term down trend.
[caption id="" align="aligncenter" width="570" caption="U.S. DB Oil Fund (DBO)"][/caption]
Evidently, my stop is DBO pass \$25. That is around \$10.00 for HOD.TO.
Thus, my risk is (\$10.34 - \$10.00) * 250 = \$85 + \$9.90 commission = \$94.90 = 0.98% of my Questrade RRSP trading account.
Frankly, my conviction in this trade isn't that strong. But as the setup is there and the reward/risk is good, I am taking a light stab at it.
[caption id="" align="aligncenter" width="570" caption="DBO intraday"]1[/caption]