If no reference points would be available, I’d have to wait for the monthly (M) candle bar to close and show a bullish behavior like in the following graph:
where the bar “1” is the past bar (in trend), “2” is the closed bullish PB retracing (RET) on top of the monthly support (M S, in purple) 530. Since the method says I have to wait for the January PB to close, the first trading opportunity would be in February. Too late to take Hulkageddon’s price spike.
The trade
But luckily, there was a very strong reference point: M uptrend plus BRN 500. This allows using a PA (price action) method tecnique called Price Action Method (PAM) that basically says that a trader may use a direct PA pattern on a daily chart when it sits on a BRN.
On Jan 17 there is a nice PB sitting right on BRN 500 (see daily graph below).
In real life (RL) trading I’d put a stop buy order above the PB and the closest bars, in this specific trade it’s at 504 ISK. The stop loss (SL) has to be put below the lowest of the PB minimum (490) and the minimum liquidity level accepted by buyers, established on October 20 2011 at 479.92 ISK (480). Of course in EvE® Online there are neither stop buy orders nor SL orders. Since I am very lazy, I just buy from sell orders that land at that level for the next 2 days. The capital reserved for this trade is 10.08B, for a total of 20M units.
The first target, obviously, is the same BRN 600 that halted the price so hard in December but with some luck it’d be possible to get to 648 ISK. 648 ISK is the level reached on October 15 2011.
The next days price runs its course and past Jan 21 it forms a RM (range market) with support at 514 ISK. A trader following the vanilla course could have entered on the February 4th BUOB at 531 (above the monthly price level). Safety comes at a price.
Looking at the weekly chart we can see how the market reacted quite well.
The PB “1” is the week when the trade started and “2” forms a BUOB (very rich traders able to afford weekly bars trading could buy the BUOB with an order at 546). Notice the December 25 2011 bar? It touched BRN 600 with ISK precision. Taking so much liquidity at that level shows that BRN 600 is not just “a” round number but a round number that counts. In fact round numbers are not important “just because they are round” but they become important after the collective of the traders paid them attention.