In last night’s edition of Swing Trader’s Insight, I noted that gold futures had two potential trades today. It could be either a Taylor Trading Technique Buy day or a breakout trade, which could potentially move in either direction.
For the Taylor Trading signal we had the following pattern this week. Monday was a breakout setup (inside day, NR4 and doji). This setup yielded a breakout rally on Tuesday. Normally we would anticipate a Taylor Trading Sell day on Wednesday but in the session following a breakout move I look for a Taylor Trading move in the opposite direction (an upside breakout is followed by a TTT Sell Short day, a downside breakout is followed by a TTT Buy day.)
Wednesday, however, did not behave as a Sell Short day. There was little bearish movement (the open and the close were relatively close) and what’s more, it was an inside day. These two patterns gave us the other feasible alternative of a breakout setup for today.
The Wednesday low of 1285.00 was the primary reference price for a downside breakout. This level was first broken around 6:40 AM; it traded back and forth over this level until 8:30 AM, when it finally broke down. Shorts could be initiated anywhere in this period, with an initial stop loss above the intraday double top in the 1286.50 area.
Gold took off to the downside at 8:30, coinciding with the stock market open. The Fibonacci retracement support at 1280.10 and it fell to the session low of 1273.50. It made a double bottom there, which was followed by a recovery rally. If you still held shorts I would watch the 1280 area as a pivot point for the balance of the session.
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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