By the Taylor Trading Technique today was a Sell day in the TTT cycle. However, Monday’s range contraction, doji bar and the daily down trend meant a short sale opportunity might come a day early.
Monday was a TTT Buy day for silver futures. Friday saw bearish price action and Monday, in turn showed a TTT Buy day. Monday saw a successful test of the previous session low followed by a rally. Monday’s rally (TTT Buy day) meant a Sell day would be anticipated for Tuesday.
However, as I noted above, there were other patterns that told us to look for a short sale in silver futures today. First, Monday showed significant range contraction from Friday (Monday’s range was 50% of Friday). It also was a doji bar, and this combination of patterns told us to anticipate a breakout move for Tuesday. These patterns, combined with the daily down trend, meant we could look to enter a trade in the direction of the trend.
1958.5 was a reference price on the September silver chart, being a 50% retracement from Monday’s low to today’s session high. A drop back below that level could lead to a bigger selloff.
As I was writing the STI morning watch list, the market had dropped just below the 1958.5 Fib level, making a session low of 1957.0. A drop below the Fib level and the session low would indicate a resumption of the down trend and a short sale opportunity.
The short sale was initially triggered around 8:15 AM, although we had about 20 minutes to continue to have the opportunity to sell in that area. The initial stop loss could go above 1961.5; the high of the first bar to break below the Fib level.
After edging lower for a time, the selloff accelerated around 8:40 AM. It hit and quickly fell below our first downside target of 1947.0. This was a good example of using some discretion in your trading, Observing the speed with which the market dropped through the first target, we had some confidence that the selloff would continue.
Essential Guide for Futures Swing Trading
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