Gold futures had followed the Taylor Trading Technique (TTT) cycle for the past two sessions. Today was a Taylor Trading Buy day and it stuck to the script for another day.
Friday was a TTT Sell Short day (I wrote about that HERE) and the bar looks like a Sell Short day- the market opened near the high of the range and sold off to close near the session low. Friday’s Sell Short day meant we would anticipate a TTT Buy day for Monday- “Buy Day” was my comment in last night’s edition of Swing Trader’s Insight (STI).
For a Buy day, we look for a mirror image to a Sell Short day. On a Buy day the market opens near the previous day low (the Buy day reference price) and makes an initial push below it. If this selloff fails, we go long when the market moves back above the reference price, looking for the market to rally over the balance of the session.
For February gold futures, today’s reference price was $1150.30 – the low from Friday. This low was logical for a market pivot point, as it was at the psychological $1150 area. If it held, a recovery rally was likely. If it couldn’t hold $1150, a bigger selloff would be expected.
On Sunday night we saw the initial push lower as Feb. gold traded down to 1146.50. When I was writing the STI Morning Watch List, gold was working back higher- it traded back and forth over the reference price a couple of times. From about 8 AM until 9:25 it made a few more pushes below the reference price.
You could have looked to go long anywhere in here – as long as it remained above the overnight low (the standard TTT Buy day stop loss point) you were OK, and the higher lows made over the morning were an additional bullish pattern. (If you bought on the last signal (at 9:30) you could also use one of the higher swing lows for a stop loss level.
Gold staged a good Rally from 9:30 on, moving higher as the US Dollar sold off. Friday’s high of 1164.30 was an objective and resistance for a rally, being a nearly three week high. It was briefly able to get a bit above the Friday high however the inability to maintain trade above it was a signal to take profits, and then the Friday high proved to be resistance around 12 PM.
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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