Today is a Taylor Trading Buy day for crude oil futures. This means we would anticipate an early session selloff, pushing the market at least below the previous session low. We would then look for a subsequent rally, going long when the market begins to rally. Normally we look at the previous day low as a reference price but sometimes the market gives you a better setup.
For the Taylor Trading Technique (TTT) we have a two-step procedure for entering a trade. First, we look for a move below the reference price as a heads up to anticipate a buying opportunity. A subsequent move back above the reference price is our trigger for a long entry.
July crude oil opened at 48.85 last night and subsequently sold off, making a session low of 48.21 a few hours later. I don’t normally enter trades at night however we can use overnight highs and lows as additional reference prices for trades during the following day session.
For a standard TTT trade entry, we would look for a move back above the Friday low of 48.80 as our entry trigger. In this case (as I wrote in this Morning’s Swing Trader’s Insight watch list), we could alternatively use the overnight low of 48.21 as a reference price, buying after a failed break below that low.
After 8 AM we got the move below the overnight low to make a new low at 48.16. A few minutes later it traded back above the previous low, giving us an early buy trigger. If you chose to take this early entry we would place stops below the session low- we want to hold trades when momentum is in our favor and a new low would be a signal of bearish momentum.
Crude oil rallied from there, trading above the Friday low about an hour later. If you chose the standard TTT entry, this is where you would go long. It reached a session high of 49.28 and a double top at that level about 30 minutes later was a signal to take profits.
Essential Guide for Futures Swing Trading
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