The Taylor Trading Technique (what I use for my Swing Trader’s Insight advisory) said to anticipate a Sell Short day for soybean futures today. This turned out to be a great example of what a Taylor Trading day looks like.
Yesterday I wrote about yesterday’s Buy day in soybean futures (I wrote about that HERE.) For Thursday, the TTT would have us look for a Sell day – a session in which the market would trade up to the previous day high (and possibly exceed it by a bit) and end up closing around the high. On the following day (day three of the cycle) we would then look for a Sell Short day. On a Sell Short day we look for the market to fail around the previous day high and then sell off – the mirror image of a Buy day.
At first glance I thought beans would have a Sell day today however I rethought that idea this morning and in the Morning Watch list for STI, I suggested we look for the Sell Short day to come a day early. For a Sell Short day we look for the market to expend its upside momentum and reverse to the downside.
I had three reasons to look to sell today:
1. Wednesday was a WR7 day – the widest trading range of the previous seven days.
2. On Wednesday the market closed near the high of the day and just short of last week’s high (failure to clear the high could lead to selling).
3. ROC (the bottom panel of the daily chart) was at the highest level in a week – a signal to look for a selloff.
For a Taylor Trading Sell Short day we look for the market to trade above the previous day high. The expectation is that this rally encourages the last weak longs to buy and the last weak shorts to cover. When their buying stops, the market turns lower and the decline gains momentum as the market moves lower.
Soybeans were slightly lower last night, rallying into the morning break after a strong weekly export sales report. They sold off after the 8:30 open, and made a double top 40 minutes later. (I wasn’t really watching them at the time; that would have been a tempting sale.)
Around 10:30 AM beans pushed above the Wednesday high (a little after the US Dollar made its low for the day). This move failed, triggering our short sale. They pushed lower for the remainder of the session, accelerating down in the last half hour of trade.
For Friday, the TTT would suggest we look for a Buy day. The 1040 level is a 50% retracement of the February rally; this should be support and / or a pivot point. After two days of big moves I would approach tomorrow with caution on either side.
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.
