SLB Oil Double Top forming? The red line shows a lower high followed by a subsequent decline which is approaching the neckline of a double bottom formation.
If the neckline (dotted yellow) breaks then the theory goes that the decline should be equal to the distance between the peak and trough of the high and the neckline, as labelled on the chart by the profit target.
The decline could go on for a while but this price is closely tied to the price of oil so expect volatility, and in particular watch out for the earnings call - as a rule I do not want to be short during earnings call because the possible gap ups the next day can be devastating and take you way past your stop loss.
I'd enter my short at option 1 (diagonal neckline) or more conservatively option 2 across the horizontal break, and ideally only when the close is below the neckline, but its a matter of preference, some people prefer to trade the wick and short as soon as price crosses. I've been burned a fair few times on those false crosses so prefer to trade the close these days.
If the neckline doesn't break, well start looking for long entries...
