Daily Recap: Today was an excellent example for a reversal pattern, and how to trade it. As I mentioned yesterday, when a signal is triggered but not confirmed there is a good chance that we are witnessing a reversal pattern, and there is nothing to do but to close the previous position and open the opposite one, as much as it pains me to sometimes lose trades this way, it is part of the game. Using the system increases the odds of profitable trades and an overall profit but it also means that some of the trades will be losing ones. Trading the reversal as in our case promises to at least to minimize the loss and even may turn it to a gain. In this case the 60 min short position that was opened yesterday but did not confirm was closed today at the open with a loss of 1.11 points but the reversal 60 min long position was also opened and provided eventually a profit of 0.93 so in total the system came out of this whipsaw movement with a meager loss of just 0.18 points. Interesting enough the odds that a 60 min reversal will be profitable are very very good, which lowers the risk of making such a trade.
In the meantime the negative divergence is piling up (I think it is triple by now), so unless we see some major move upwards to brake it, I think we are due for a correction.
Battle Plan for the 10/17/2013
60 min short under 170.5
120 min short under 169.86
* Stop loss lines should be triggered if there is an interval close above them (i.e. 60 min or 120 min ), they are published in the daily blog and updated during trading hours on twitter.
* Take profit lines should be triggered immediately when crossed, they are usually issued during the trading day on twitter.
* Entry signals should be triggered when crossed, but take into account that until there is a confirmation (i.e. close of the interval across the entry signal) , the signal can become a reversal signal.
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