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Home / Futures Blog / Trading Today’s Breakout Setup in EMini S&P Futures

Trading Today’s Breakout Setup in EMini S&P Futures

August 19, 2015 by Scott Hoffman

The EMini S&P had an NR7 day (narrowest trading range of the previous seven sessions) on Tuesday. This pattern told us to anticipate a breakout move today, which gave us a good trade opportunity this morning.

Stocks rallied on Monday, pushing the S&P up to the 2100 level. The 2100 level has been resistance this month, and Tuesday saw a selloff as the market corrected against that level. Tuesday’s small range indicated a large directional move was likely today- either a rally back up above the resistance at 2100 or a continuation of Tuesday’s selloff.

ESU daily August 19

Our trade opportunity lay in letting the market decide which way it wanted to go; we would look to get on this move relatively early and then ride it as it extended in that direction. We determine which way the breakout will go by looking for the market to move above nearby resistance (often the high of the previous session) or move below previous support (often the previous session low).

If we used the previous session high and low as our initial breakout reference prices, the EMini S&P futures initially broke Tuesday’s low last night, making an overnight low of 2084.00. It rebounded a bit however it was still solidly negative (and below Tuesday’s low) at the 8:30 AM stock market open.

The fact that it was below Tuesday’s low told us we could continue to look for short sale opportunities. On breakout setup days I prefer to look to enter trades on impulse moves- a move in the session’s predominant trend, rather than retracements.

I have previously commented that I like to user overnight highs and lows for reference prices either for breakout trades or Taylor Trading Technique setups. In this case we could use the overnight low of 2084.00, taking a short entry if and when the market broke below that level.

ESU intraday August 19

The intraday chart above shows how the morning played out. The overnight low was taken out shortly after the 8:30 open, pulling us into a short sale. It fell over the course of the morning, making a session low of 2066.75 around 10:45 AM. I often look to close breakout sales by midday and either stop trading for the day or occasionally I look for a second trade opportunity. Today I wanted to get flat ahead of the release of the FOMC meeting minutes so I could look for a potential trade opportunity after the release.

Swing Trader's Insight Essential Reference Guide Cover

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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Risk Disclosure

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.

Filed Under: Swing Trader's Insight

About Scott Hoffman

Scott graduated from the University of Chicago in 1986 with a degree in Economics. After graduation, Scott worked on the floor of the Chicago Mercantile Exchange then moved upstairs, serving as the personal broker to a former chairman of the Chicago Board of Trade. There, he worked as a broker and margin manager, starting up the firm’s full service brokerage division.

Today, Scott serves as an educator and mentor for new traders, and as a trading partner and ally for experienced traders. The breadth and depth of Scott’s knowledge make him the “go to guy” for both retail and institutional traders.

Scott also publishes two futures advisories, Swing Trader’s Insight and Trade or Fade. He also writes the futures trading blog at www.futuresinsightblog.com. Scott has written articles for a number of futures publications and has done numerous futures trading seminars, including seminars for both the CBOT and CME.

Scott offers his customers the knowledge he has gained from his more than 25 years of experience in the futures business. Scott is accepting new clients at this time.

Scott lives in suburban Chicago with his wife and three children. In his free time he enjoys coaching his children’s sports and various other athletic activities.

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Risk Disclosure

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.

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