On June 30, I saw that EUO was touching the lower line of a possible triangle. I realize that a triangle in a bear market should be a continuation pattern. For this reason my stop is close to the lower line. However, I also see this triangle as a possible reversal, and with the price now so close to the lower line, it allows for a low-risk entry. I will have to move my stop up every day, especially as we get closer to the upper line.
At the same time, I have placed a stop order on ULE, so in case the triangle is broken to the downside on EUO, it will be broken to the upside on ULE, my buy order will take place, and I will ride that move, possibly as far as it gets. By measuring the length of the move prior to the formation of the triangle in ULE, from 26 to 32, this would mean a move from 29.5 to 35.5. Honestly I find it hard to believe - but I will observe and report.
On July 7, after seeing a gap up, I moved up my protective stop to halfway through the gap, at 17.06. That same day EUO moved down to 17.03, and my stop was hit.
This chart makes it clear that my stop was once again too tight - the lower third of the gap would have been a better choice? Maybe the lower end of the gap, at 16.99, would have been right. I was worried about protecting my gains up to that point. The next day, Friday, EUO moved up to 17.42, only 0.03 below my measured target of 17.45.
Lessons of the trade
The lower end of a gap is a good place to put a stop.
When considering measured targets, it may be wise to reduce them by a tiny bit, like 0.5%.
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