In this morning’s watch list for Swing Traders Insight I wrote that I was interested in shorting the EMini S&P futures, pointing to the 2007.75 level as resistance. Here’s how you could have traded this.
Today was the Sell day of the Taylor Trading Technique cycle. A TTT Sell day is preceded by a Buy day, a session in which the market tends to open toward the bottom, rallies and closes near the top of the daily range. (I provide a more in depth explanation of this in the Swing Trader’s Insight user’s guide; you can get a copy HERE.)
On a Sell day we often anticipate the market will trade on both sides of unchanged- it may see some follow through rally from the previous session but it often doesn’t make a strong move in either direction.
However, I thought today was susceptible to a larger down move. The daily trend is down and the ROC indicator was up a sell signal level. Additionally, the market’s recent pattern has been for rallies to fail and turn into selloffs, as would be expected in a down trending market.
For this reason we were looking to short the market into a rally. I picked the 2007.75 level as it had been the last overnight high- a failed rally against that level would be a sell signal.
The 8:30 AM open was 2000.75 and it quickly rallied, reaching a day session high of 2012.50 around 8:50 AM. The rally stalled, and the subsequent move back below 2007.75 triggered out short sale. By 10:15 it fell to the overnight low of 1995.25; the failure to hold under this level was a signal that the selloff had stalled and we should cover shorts.
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.
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.