Scalping Crude using ATR Strategy (based on the Average True Range Stop or plus sign on the chart) results in a profit of sixty-seven ticks or $670 this morning during the European session.
Scalping Crude Using ATR Strategy
First, the direction of the forty-five minute chart was short. Price was at the Average True Range Stop (plus sign). If you were using the ATR Strategy on the forty-five minute chart, then you see an entry to the short side is generated for intraday traders.
For scalping, using the three minute chart, going in the direction of the forty-five minute chart, the ATR (Average True Range Stop) Strategy provides three opportunities for entries because price retraced to the ATR generating entries. The first trade made fifteen ticks; the second entry generated another thirty-eight ticks of profit; and the final trade produced another fourteen ticks of profit.
Why would a trader choose to scalp Crude instead of intraday trading the forty-five minute chart? Some traders have the scalper mentality and want to get in and out very quickly, after all Crude is a very volatile market.
Another reason to choose the three minute chart this morning is that the 180 minute chart is extremely oversold with the ADX indicator showing a 76.60 value. Crude is also at the ATR stop on the 720 minute chart. Taking profits quickly this morning would have been a better option as there is potential support on the 720 and a potential oversold market on the 180 minute that could turn violently against the trader.
The only indication that Crude may continue down is the 1440 minute chart showing a retracement to the ATR stop at 28.36. Which timeframe will prevail? The higher timeframe (1440) normally prevails. However, it is a tricky slope because a bounce on the 720 from the ATR (which is typical behavior) would take all the profits on the forty-five minute chart.
Observing all these factors, scalping Crude using ATR strategy on the three minute was probably a better choice.