Treasury bond futures had a breakout setup for today- Friday was an inside, NR7 day. Normally we use the previous day high and low as the primary breakout levels however sometimes it makes sense to look for earlier entries.
In today’s Swing Trader’s Insight Morning Watch List I suggested we use the overnight high of 165-10 and low of 164-23 as breakout levels. I suggested the upside level be above Friday’s high because it had already failed to clear it once, and we could use a higher low for the downside because of the upside failure as the lower it went, the more it would squeeze out overnight longs.
When I started writing the watch list around 7 AM, bonds were trading in the low 165 area. Around 7:30 it pushed up to but was unable to clear the Friday high. This failure marked the start of the downturn.
The higher stock market open added to the pressure on bonds and around 8:45 the market pushed below the 164-23 overnight low, triggering out short sale. The initial stop loss could be placed above the recent 165-00 high.
The selloff gained momentum over the morning, as is often the case on a breakout day. The Friday low was taken out around 9:20, pushing down to the session low of 163-30. The low was tested and held for about 20 minutes, leading to a recovery rally.

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.
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.