By the Taylor Trading Technique, the Treasury Bond futures were on the Sell Short day of the TTT cycle today. I was keeping an eye on stock indices but there were some crosscurrents there (S&Ps on a Buy signal with the overnight low of 2052.00 as a reference price, the NASDAQ on a Sell Short signal). With T Bonds, they had a breakout rally on Friday and were testing Fibonacci retracement resistance at 142-22 basis March futures.
Friday’s breakout rally meant bonds had a Sell Short day for Monday, and the reference price of 142-26 roughly lined up with the 142-22 Fib level. If this breakout rally failed, the drop back below the Fib level could give momentum to a selloff.
Bonds rallied overnight as stock and commodity prices were lower, and they pushed well above the Friday high. There was a minor rally after the stock market open, and then a selloff got started after a stronger than forecast ISM manufacturing report was released at 9 AM CT.
By 9:10 AM the market dropped below Friday’s 142-26 high, the TTT reference price. This triggered our short sale; the initial stop loss could go above the 143-03 swing high.
Bonds sold off steadily over the session; the series of lower highs and lower lows over the session was evidence that momentum continued to favor the short side. Given the size of the selloff, I would prefer to cover shorts before the close today, in anticipation of a Taylor Trading Buy day for Tuesday.
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.
STOP ORDERS DO NOT NECESSARILY LIMIT YOUR LOSS TO THE STOP PRICE BECAUSE STOP ORDERS, IF THE PRICE IS HIT, BECOME MARKET ORDERS AND, DEPENDING ON MARKET CONDITIONS, THE ACTUAL FILL PRICE CAN BE DIFFERENT FROM THE STOP PRICE. IF A MARKET REACHED ITS DAILY PRICE FLUCTUATION LIMIT, A "LIMIT MOVE", IT MAY BE IMPOSSIBLE TO EXECUTE A STOP LOSS ORDER.
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