In this morning’s watch list for Swing Trader’s Insight I commented that a rally above yesterday’s high could see follow through. This turned out to be a good trade opportunity; let’s take a look at it.
In last night’s Swing Trader’s Insight I listed the November soybean futures as a breakout trade candidate. The breakout setup was signaled by the inside day and range contraction Wednesday. The breakout setup meant that either a move above the previous session high or below the previous session low was likely to see follow through. (The daily trend is up and the Taylor Trading Technique had today as a Buy day however we should try to keep an open mind as to trade direction on a breakout day.)
I like trading the grain markets because the separation of trading sessions gives us a distinct opening to trade in the morning; this can give us trade opportunities that we might miss in “always on” markets like the currencies. For the November beans, there was an overnight move above 965-0 (Weds. high); this gave us a heads up to watch beans for the day session.
The day session open was 965-0 and within the first five minutes it traded up to 970-2. This rally cleared the session highs of the past two days, giving us our buy signal. After a period of consolidation, Nov. beans rallied to a session high of 978-0. Quick traders could have taken profits on this move, while patient traders could have stayed long, as it continued to make higher lows over the remainder of the session.
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Essential Guide for Futures Swing Trading
In this guide, experienced trader and broker Scott Hoffman explains the trading methods he uses to analyze and trade the futures markets and to publish his trade advisory, Swing Trader’s Insight.
STOP ORDERS DO NOT NECESSARILY LIMIT YOUR LOSS TO THE STOP PRICE BECAUSE STOP ORDERS, IF THE PRICE IS HIT, BECOME MARKET ORDERS AND, DEPENDING ON MARKET CONDITIONS, THE ACTUAL FILL PRICE CAN BE DIFFERENT FROM THE STOP PRICE. IF A MARKET REACHED ITS DAILY PRICE FLUCTUATION LIMIT, A "LIMIT MOVE", IT MAY BE IMPOSSIBLE TO EXECUTE A STOP LOSS ORDER.
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