This chart contains a pattern within a pattern, which will be a popular theme on the Chart of the Day.

This pattern drew my attention due to an unsymmetrical VT. Why the bad symmetry? For starters, the handle portion of the VT contains less than 3 bars. Secondly, the ratio of bars (in terms of width) between the handle and the cup is distorted. Remember, I prefer between a 1:2 ratio and 1:3 ratio, and the 2:7.5 shown here is what I consider to be bad symmetry. Additionally, I prefer a good "height ratio"...specifically, that the height of the handle is somewhere around 1/3 the height of the cup, and also that the handle occurs near the -100 line (this being a long setup). As you can see, the swing low of the handle formed somewhere around -50. So there are at least 4 reasons to dismiss this VT. However, the divergence between price and CCI here is what I call a DBD, or Double Bottom with Divergence. A good risk/reward play here is to buy the Euro as close to the swing low of price as the previous swing low after confirmation of the divergence is observed...the advantage being that you know where you are wrong, a trade somewhere below the previous low on price. There are usually very good risk/reward scenarios in this pattern. However, this is an advanced pattern that requires much discipline and practice to master.

Please note, this is not a WCCI pattern, but a madscalper derivative. By the way, I call the shortable version of this pattern the DTD (Double TOP with Divergence). 5/6/05

The DBD is an extremely aggressive pattern and should not be attempted by traders new to the method. This nuance is very risky and has a large probabilty of failure, which is why you must use tight stops and wide targets to enhance your long-term probability of success. Always, always, always use stops when trading this and any other futures trading technique. While this pattern presents a high risk-reward scenario, you can expect many failures before experiencing a success and therefore must be prepared for substantial drawdowns when trading this pattern.