The soybean complex has been in a strong rally in October, led by tight supplies in the soymeal market. This rally has led to some good trade opportunities (read my posts here and here) when the market pauses or corrects before resuming the rally.
In this morning’s Swing Trader’s Insight watch list I pointed out that today was a Taylor Trading Technique Buy day for the January soybean futures. (The soymeal had a TTT Buy day as well; I chose to focus on the beans because beans have been less volatile. This setup worked in the meal as well.)
In the STI watch list I mentioned two reference prices to use for the day session; Thursday’s low of 1029-0 and the night session low of 1024-6. On a TTT Buy day, we look for an initial move lower, to trade below our reference price(s). We then go long when the market trades back above the reference price.
Thursday was an NR4 day for January soybeans. The narrow range could signal a lack of interest to trade against the major trend but it could also result in a further downside push before the expected upside reversal.
Beans did push lower last night, trading well below the Thursday low. The day session open was 1025-2, it pushed to a session low of 1016-4 by 8:40 AM and then began to move higher. As it moved higher we started to look for more definitive evidence that the low was in; the TTT uses a move above reference price(s) as evidence of a trend change and trigger for entry.
I write the STI watch list before the morning grain open so I don’t have the opportunity to adjust my comments for the day session activity; in this case a really aggressive long entry would be to go long when it traded above the 8:55 AM high of 1022-6. As I wrote in the watch list, our first long entry occurred around 9:50 when it traded above the night session low of 1024-6.
The initial stop loss for this trade could go somewhere between the 9 AM swing low of 1018-0 to the session low of 1016-4. (We want to be long as long as the trend is up, and an up trending market shouldn’t trade below previous lows.) The rally continued, and 1029-0 (Thursday low, the standard TTT entry level) was taken out around 9:30 and then again at 9:45. It got up to make a day session high of 1036-0 before backing off.
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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