As of Thursday AM the EUR TRAK is forecasting lower lows with the current 5 minute bar signal looking for a bullish confirmation back to the upper channel band. The overnight action also provided an opportunity to refresh some of the parameters for the Little Dipper . . in this case the entry was voided due to the lack of any confirming indicators.
The Dipper trend from 3:00 to 4:00 was downslope, but at 4:00 the momentum had clearly turned bullish . . the parabolics, 8/8 hi/lo channel and the LR line were all positive. When this degree of divergence is encountered the only course of action is to hold back on the Litle Dipper entry. Keep in mind that this setup is intended to augment the 3:00 Dipper and is best executed as a kind of correlated pair trade. The Dipper itself produced a net 30 pip gain after a 15 pip trailing stop exit at 3:50, which should have provided another clue that things were about to change going into 4:00. My general rule of thumb is, “When in doubt, get out” and a corollary of that would be “When in doubt, stand back”. Our tactical goal with the 2 Dippers is to follow the overnight trend WHEN IT IS CLEAR. These are NOT countertrend systems.
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