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Home / Futures Blog / December 7- Breakout Trade in EMini NASDAQ Futures

December 7- Breakout Trade in EMini NASDAQ Futures

December 7, 2016 by Scott Hoffman

The EMini NASDAQ futures had a breakout setup for today. While I normally use the Taylor Trading Technique to look for trades, breakout setups are special situations.

The NASDAQ was interesting this week. Monday saw a strong rally out of another breakout setup; it was also a Taylor Trading Buy day (there was an early session move below the previous day low, which led to a rally over the remainder of the session.) The following session is usually either a Taylor Trading Sell day (consolidation around the Buy day high) or it’s a Taylor Trading Sell Short day (a selloff to take away the previous day breakout rally.)

Tuesday’s pattern in the NASDAQ was a Taylor Sell day as the market did consolidate around the Monday high. However, Tuesday was an NR7 day as well, meaning on Wednesday we would anticipate a breakout move (potentially in either direction) rather than the Taylor Trading Sell Short day we would otherwise look for.

When a market has a breakout setup we look for the market to make a directional move. Specifically, we look for a move beyond close in support or resistance. In turn, that initial move serves as a springboard to a larger move in the breakout direction, as the market gains momentum in a positive feedback loop.

For the NASDAQ futures, our reference price (breakout level) was the Tuesday high of 4796.50. Additionally, there was Fibonacci retracement resistance just below 4700, so clearing that level could add to upside momentum.

The market spent much of the morning trading flat to lower, finding support around the Tuesday low. Just before Noon it pushed above the Tuesday high, triggering our long entry. This kicked off a bigger rally and the market has been trending higher over the course of the afternoon. This rally is characteristic of a breakout day, where the positive feedback look tends to cause the market to move in one direction, with small or no pullbacks to allow for later entries or relief for those on the wrong side of the market.

I learned about the Taylor Trading Technique from Linda Bradford Raschke. Her application of the TTT seemed to be practical and flexible, using it when it would help trading, rather than applying a rigid TTT framework to market analysis. When I get questions and inquiries from other (especially new) TTT practitioners, I think my expedient approach isn’t the strict methodology some would prefer. I think a trading method should be judged by its results, not how exactly its rules are applied, so this works for me.

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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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