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.
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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