The past two sessions in the stock index futures has been a good example of how the Taylor Trading Technique cycle works.
Yesterday the stock index futures sold off out of a breakout setup (I wrote a post about it HERE). Monday’s selloff meant we anticipated a Taylor Trading Technique Buy day today.
In the Swing Trader’s Insight morning watch list, my comment for the eMini S&P futures was “. 2062.00 is the standard Buy day reference price; we can also watch the overnight low at 2065.50.”
For a standard Taylor Trading Buy day setup we look for a failed move below the previous day low to be our trigger for a long entry. If you’ve been following STI for a while you know that I like to use overnight session highs and lows as additional reference prices for Taylor Trading setups for stock index futures, as the overnight trade can be thought of as a distinct trading session.
For this reason I suggested watching the overnight low of 2065.50 as a reference price for the TTT Buy day in case the market didn’t push down far enough to reach the Monday low.
Early in the day session I wasn’t sure we would get a trade today- the eMinis opened at 2067.75 and rallied to a day session high of 2075.00. The initial rally stopped here and a selloff ensued.
This selloff gave us our buying opportunity. The market sold off, making a day session low of 2064.50. This break was our heads up to look to go long and the subsequent move back above 2065.50 was our trigger to go long.
Stocks rallied from this 9:30 AM low; the series of higher lows and higher highs was evidence of the uptrend. The day session high of 2075.00 was reached around 1 PM; this stopped the first move up while the 1:40 PM move through that level yielded a rally to the overnight high of 2078.75.
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