Yesterday the eMini S&P futures made a big down move out of a breakout setup. By the Taylor trading Technique, we would anticipate a Buy day for the following session. The rally started relatively late in the session and followed an early plunge, but we did see the rally that the TTT told us to expect.
EMini S&P futures had a breakout setup for Wednesday; Tuesday was an NR7 and a doji day. This resulted in the big downside move on Wednesday. Pushing below the 100 day SMA at 1945.70 (the dotted blue line) added some panic to the session.
For the session following a breakout move day, the Taylor Trading Technique tells us to anticipate a TTT day in the opposite direction. We look for a downside breakout day to be followed by a TTT Buy day and an upside breakout to be followed by a TTT Sell Short day. This is because a breakout move often pushes a market to a level that’s “too low” or “too high”, which prompts Taylor’s “smart money” traders to take advantage of the overshoot. (It’s like a buying or a selling tail, in Market Profile terms.)
So yesterday’s downside breakout and today’s TTT Buy day signal told us to look for early session follow through selling. We look for this early selloff to run its course and then we go long when the market starts moving back up.
The previous session low is the standard reference price for a TTT Buy day. An initial move below the previous day low is a heads up to look for an upside reversal. We then look to go long when we have evidence that the market is moving higher, and stay long as long as the market moves higher. We should be patient and enter only when momentum favors our play, and then be patient to stay with the trade as long as momentum is in our favor.
After making a day session high of 1942.50, the market made a series of lower highs and lower lows until making the 1918.25 session low around 10:40 AM. As long as it kept making lower highs and lows we wouldn’t buy, as momentum was still down. The market started to rally after making that low however we still needed a signal that the momentum was to the upside.
There were two levels to use for confirmation of upside momentum. Aggressive traders could use the 11:30 AM high of 1928.50; a rally above this level would mark the first time the market took out a previous intraday high. This aggressive long entry came around 11:50. The 1923.75 swing low was a good level for the initial stop loss, as breaking below there would end the new stretch of higher lows.
The standard TTT Buy day entry would be a move above the previous day low of 1933.75; this was triggered shortly after Noon CT. The rally has continued from there, with 1945.75 as the next rally objective (it also marks the 100 day SMA, adding to its significance.)
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.
The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.
Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.