Today was a Taylor trading Buy day in the EMini S&P futures. It made a textbook low violation and rally; exactly the action the TTT would tell you to anticipate.
Monday was the Sell Short day of the Taylor Trading cycle (I wrote about that trade HERE.). The daily bar shows the standard profile of a TTT Sell Short day- the open near the high of the daily range, a trend lower over the course of the session to finish with a close near the daily low.
The Taylor Trading Technique tends to view markets as moving in an action and reaction cycle so following Monday’s down move we would anticipate a reaction rally today. Knowing this, we would look for the market to open near the low of the session, put in a bottom and then rally.
On a TTT Buy day we would specifically look for an initial move below the previous day low. We anticipate this initial selloff would fail, with the reversal and rally would be our signal to go long, looking for the market to continue higher over the remainder of the session.
In this case our reference price for a TTT Buy day would be 2198.25, the low from Monday, We would look for an initial move below the Monday low to give us a heads up for a buying opportunity with a subsequent move above the reference price to be our buy signal.
The intraday chart below shows how the morning went. Monday’s low held in the premarket open then the 8:30 open led to a push below our reference price. A quick move back above the reference price gave us our buy signal.
Our initial stop loss could go below the session low of 2196.25 (we wouldn’t want to see a new low after we went long). Over the morning the market moved higher in a “3 pushes pattern”, making a session high mid-morning. A lower high made around Noon Central may be a signal to take profits.
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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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