EEP: Short Entry Stop $35.95

Here's yet another paper trade order from my new trading strategy. The short entry stop is set at \$35.95 for -30 shares (just over \$1k total). Stop is at \$37.79, the recent high (Figure 1). Target is \$29.5, a support level just above the trendlines intersect about \$27.5 (Figure 2).

Assuming a perfect entry at \$35.95, the risk is \$1.84. The reward is \$6.95. Thus, the risk/reward is 3.77, which is above a 3-fold risk/reward as I prefer.

For this trade, I've also considered the sector strength as a whole. From Figure 3, we see that XLE is approaching a congestion zone about \$48 - \$50. So there is an upside resistance to the Energy sector.

[caption id="attachment_1351" align="aligncenter" width="500" caption="Enbridge"]Enbridge[/caption]

[caption id="attachment_1352" align="aligncenter" width="500" caption="Enbridge"]Enbridge[/caption]

[caption id="attachment_1353" align="aligncenter" width="500" caption="Energy ETF"]Energy ETF[/caption]

Posted 05 May 2009 in stocks.