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
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