Trade signals for the Taylor Trading Technique are clear cut much of the time. We should look to go long on a TTT Buy day and go short on a TTT Sell Short day. On occasion Mondays can be an exception to this; here’s an example of how to identify and trade an exception.
I’ve found the key to understanding how to trade Mondays is to look at the Sunday night trade and Monday’s day trade as two separate sessions. In some market sectors (I’ve observed this in stock indices, energies and grains) on Sunday night we often see the move that the TTT would anticipate. However, there are occasions where a TTT move exhausts itself on Sunday night, which then results a move corresponding to the following day in the TTT cycle.
The crude oil futures proved to be an example of this reversal today. In last night’s Swing Trader’s Insight advisory the October crude oil futures were labeled as the Sell Short day of the TTT cycle. This meant we would anticipate the market would open near the top of the daily range and then trend lower, so we would look to get short.
That’s what we saw last night. October crude oil futures opened at 92.13 last high and by 7 PM CT it feel to a session low of 90.63. However, this low held and the market began to rally. By this morning the chart showed a series of higher highs and higher lows intraday.
The overnight uptrend meant the TTT Sell Short day move had likely run its course and for Monday we could anticipate a rally (a TTT Buy day). Knowing what to anticipate is the first part of the equation, in order to trade we need confirmation that the market was doing what we anticipated.
In this morning’s Swing Trader’s Insight watch list I suggested two levels to use as reference prices for the Buy day. The first was the overnight double top at 91.74; the second was the Fibonacci retracement level at 92.15. A rally above these levels would be confirmation of a rally and consequently a buy signal.
Around 8:15 AM we got the move above the 91.74 double top, triggering the first long entry. By 8:15 AM it rallied above the 92.15 Fibonacci retracement level, and it rallied to a session high of 92.72. Holding above the 92.15 Fib level predicts a move to Friday’s high of 93.67, although this seems like a stretch for today.
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.
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