Today was a Taylor Trading Technique (TTT) Sell Short day for the EMini S&P futures. As is often the case, Mondays often behave differently than the other four trading sessions of the week- I suspect it’s the longer break between trading sessions.
For a TTT Sell Short day, our standard setup is to look for a failed rally above the previous session high, which turns into a down move. That setup would have us looking at the Friday high of 2272.75 as our reference price. However, the Friday high was relatively high above Friday’s close. With the market trading lower Sunday night, reaching the Friday high would require an even bigger (and more unlikely) rally.
Because of this, we looked for a more likely reference price. I do this by viewing the Sunday night trade as a session unto itself, so we highs and lows from that session as another set of reference prices for gauging trend changes.
For this morning’s Swing Trader’s Insight watch list I suggested we use the Sunday night high of 2266.00 as a lower and more realistic reference price. As with any other TTT Sell Short day, we would look to short the market after a failed rally above our reference price.
The 8:30 AM open was 2262.50 (I generally look to trade during stock market hours) and within five minutes it had rallied above our 2266.00 reference price. A few minutes later it moved back below the reference price, triggering our short sale.
The initial stop loss for the trade could go above either today’s high of 2267.50 or the Friday high of 2272.75. By 9:15 AM it broke the Friday low, and at 10:40 it reached last week’s low of 2253.00. I would watch 2253.00 as a pivot point for more downside – the trend is down, which suggests more selloff to come.
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.
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.