In last night’s Swing Trader’s Insight advisory I labeled the eMini NASDAQ futures a Buy day according to the Taylor Trading Technique cycle. I reiterated that call this morning (read that post HERE); saying we should watch Monday’s low of 4010.50 as the reference price for a buy signal.
The eMini NASDAQ futures sold off on Monday, breaking out of a three day channel from last week. Monday’s selloff meant we would anticipate a TTT Buy day for Tuesday; the buy signal was corroborated by the drop in ROC (indicating a momentum change was likely).
For a Taylor Trading Technique Buy day we observe the market’s action in relation to the previous day low- our “reference price”. We look for an initial move below the reference price to give us a “heads up” for a buying opportunity and a subsequent move back above the reference price being our trigger to go long.
The Naz spent the night above Monday’s high, finally dropping below it a little after 8 AM. This was our trigger to look for an entry, and we would look to go long when the market moved back above our reference price.
Our buy signal was triggered about three minutes after the stock market open (8:30 AM CT). The initial stop loss was placed below the session low- this was a tight stop, but if the market made a new low we would close out the trade and look to see if upside momentum reasserted itself later in the session.
The Taylor Trading Technique looks to make one trade per market per day, and we try to be patient and stay with a trade as long as the market continues to trend in our favor. In this case, we would want to stay long today as long as the market continued to make higher highs and higher lows. Given the size of today’s move and that the FOMC meeting wraps up tomorrow, I would look to close out this trade by today’s close, whereas the TTT suggested holding trades overnight in anticipation of follow through momentum.
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