Early emails today mentioned that the EUR Dipper setup failed this morning. Sorry to disappoint my trader buddies… but it worked just fine! Let’s review the chart to see what happened….
Keep in mind the time scale is based on Chicago time zone. Going into the 3:00 entry trigger the SMA and linear regression line were up slope, the parabolics were on a BUY and the 8/8 hi/lo channel were all giving a GO signal… and an entry was executed at 1.2828.
There was an immediate reversal of 9 pips but our threshold stop loss/trailing stop is 15 pips (based on the close of the bar) so the trade is still on as of 3:25 when we get the surge up until 5:30 when things get dicey (all on low volume) and a 15 pip trailing stop fires a COVER signal at 6:10 at 1.2840. The rest of the session reflects the jobs report dynamics and the subsequent fade of the US equities markets. Although the net gain today was only 12 pips the trade did provide a successful example of the Dipper setup if the rules were followed.
Going forward into next week I’ll explore some longer term latency issues of the FXE/SPY pair and implications for trading that pair in conjunction with the EUR/USD. While this may seem like a radical departure from my usual trading methodology my goal is simply to make money consistently and perhaps more importantly, not to lose money. These forays are nothing more than attempts to realize those goals in the face of a rapidly changing US equities market that has become increasingly problematic for many retail traders, myself included.
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