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Home / Futures Blog / June 6 – Two Setups, One Trade for Soybean Futures

June 6 – Two Setups, One Trade for Soybean Futures

June 6, 2017 by Scott Hoffman

Today the July soybean futures are on the Buy day of the Taylor Trading cycle; they also have a breakout setup. This gave us two different setups to look for when trading them today.

Recently I had a reader ask me about alternative setups to look for to use the Taylor Trading Technique (TTT) doesn’t follow the cycle clearly. I believe I use the TTT less rigidly than many practitioners. Rather than using a strict TTT count, trying to fit my trading to the market, I stay with the TTT when it’s clear to me. If it’s not clear I will either look for a different setup to trade or failing that, I leave that market alone and look for something whose pattern looks more logical or looks to have more potential.

That’s one of the reasons I cover so many markets for my Swing Trader’s Insight advisory. There are times when a given market looks like it doesn’t show much trade potential (like the stock index futures the past two days). However, it’s rare that of the 23 markets I cover, there won’t be at least one or two that don’t look to have a trade setup.

This morning many markets either didn’t look to have much trade potential (stock indices, crude oil) or had already made the expected move (breakout rallies in T Bonds, Yen and Gold). However, the grains are moving into a period where trading ranges tend to pick up, and Tuesdays are often a good day to trade grains (the origin of the “Turnaround Tuesday” trading rule of thumb.)

The July soybeans looked to be the market to focus on today in the grain complex. Wheat has the best fundamental story for a move (concerns about the size and quality of the Spring Wheat crop) however the July Chicago wheat had seen five consecutive session closes within one half of one cent.

On the other hand, soybeans had recently been moving and showed range contraction on Monday (Monday range was 66% of Friday). This, combined with Monday’s doji bar, meant we could anticipate a breakout move today. Additionally, today was the Buy day of the Taylor Trading cycle (breakout rally Friday > TTT Sell Short day Monday > TTT Buy day Tuesday). Thus, we could look to go long beans either if there was a successful test of the Monday low (TTT trade) OR on a rally above the Monday high (breakout trade).

Last night, soybeans traded within Monday’s range, keeping both setups a possibility for the day session. The day session open was 924-2 and within the first minutes of the day they rallied above the Monday high, triggering our long entry. They quickly rallied to a session high of 934-2 but were unable to clear the Fibonacci retracement resistance at 935-2.

Swing Trader's Insight Essential Reference Guide Cover

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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