I use the Taylor Trading Technique for much of my work in Swing Trader’s Insight. The TTT often allows us to anticipate a market’s likely direction for a trading session and then gives us trade setups to take advantage of these daily trends when the market does what we anticipate.
For this reason I often avoid the Sell day of the TTT cycle, preferring to focus on the Buy day and Sell Short days. For a Buy or a Sell Short day we have an anticipated direction for market trend for that session. If the market does what we anticipate we have a trade, if it goes the other way we leave it be for that session.
The Sell day of the TTT cycle is a distribution day. The “smart money” traders who got long in the previous (Buy day) session now look to take profits, selling out of long positions into market strength. On a Sell day, market strength comes from traders who go long, expecting the previous session rally to continue. This sets up the market for a TTT Sell Short day in the following session.)
The eMini S&P was on the Sell day of the TTT cycle for today. Monday was the Buy day of the cycle, and the rally off early morning lows was the result. In addition, the fact that it was the first day of a two day FOMC meeting made a two sided trade more likely, as traders would be less likely to want to commit to new positions with heightened expectations for increased volatility and uncertain direction after the meeting.
This was an instance in which it might be worthwhile to look to trade a Sell day as we could anticipate a “mean reversion”, buy the breaks, sell the rallies kind of session. The reference price for a Sell day is the previous session high; we anticipate a rally to take the market back up to the previous day high
Overnight we saw the first rally. After making a session low of 1967.75 around 3 AM CT, the market rallied, reaching the Sell day objective around 7 AM. The rally paused and then made a new high around 9:15.
At this point the Sell day strategy came into play. As the rally faded, a drop back below 1976.00 led to a selloff, which found support around the 1967.75 session low. Another rally ensued, which stopped at the 1976.00 level. A second selloff then followed, which finally broke below the 1967.00 session low (this last selloff was a good example of why you don’t want to try to fade a strong move after 2:30 AM CT; there’s usually not enough time or courageous / foolish traders to fade a late move.)
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.
Risk Disclosure
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