This originally appeared as a blog post in Scott Hoffman’s Futures Insight Blog on Friday, June 06, 2014.
Today both the eMini S&P and silver futures are on the Sell Short day of the Taylor Trading Technique cycle. Silver generated a trade this morning while the eMinis have not (yet).
The eMinis are on a Sell Short day after bullish days on Wednesday and Thursday; these were the Buy day and the Sell day of the TTT cycle. Today’s Sell Short day signal tells us to anticipate a selloff, but we will short it only when the market shows bearish momentum. Initially we would look for a move back below the previous day high as our trigger for a short. As eMinis have not yet shown downside momentum we will continue to watch for a downturn but we won’t short them until we see it.
On the other hand, the Sell Short day trade was triggered for silver futures. Below is the daily chart for July silver; it had a breakout setup on Wednesday that yielded a breakout rally for Thursday. In turn, Thursday’s breakout rally meant we would expect a TTT Sell Short day for Friday.
Today’s intraday chart for July silver is below. The employment report release led to a rally in silver, pushing it above Thursday’s 1915.5 high. This rally was short lived, and the subsequent move back below 1915.5 was our trigger for the short sale.
So we shorted silver when it dropped back below 1915.5 (I suggest using stop orders to enter these trades). Once we got short, the initial stop loss would be placed above today’s high of 1920.0- we want to be short only as long as downside momentum continues.
The overnight low of 1899.5 was a good first target / pivot point for our shorts, as it was at round number support of 1900. You could take profits at this level if you chose. I like to be more flexible about trade management, and in this case the selloff accelerated when it took out the overnight low.
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