The monthly payroll report often gives good trade opportunities. It’s a challenge for me as a writer; I tend to have a few markets in mind for trade candidates, but it’s usually impossible to actually get a communication about a trade idea before the move has come and gone. I send out Swing Trader’s Insight the night before the report; I hope readers do like I do and look for the markets that have the most tradable looking setups (breakouts, Buy day that’s near the previous day low, that sort of thing.)
The clearest setup I saw this morning were the Treasury Bond futures, which had a Taylor Trading sell Short day signals for today. Gold was another possibility, although I’d prefer to buy it. Crude oil was a Sell Short day, but I didn’t see a setup for it. The currencies weren’t very clear, and I wait for the 8:30 open to trade the stock indices. (In a continuation of this week’s pattern, I was looking for a Sell Short day in the ES, sold an early break below the Thursday low, and got stopped out. The NQ Sell Short day trade hit, and is showing a tiny profit this afternoon.)
Treasury bonds had a Taylor trading Sell Short day for Friday. Wednesday was a breakout setup, which gave a breakout rally on Thursday. This made Friday an “exit breakout buys, Sell Short day” signal, with the Thursday high of 155-07 as our reference price. This lined up with the Fibonacci retracement pivot point at 155-06.
Before the 7:30 AM report release, bonds were trading in the low 156 area. A weak payroll number pushed bonds up above our 156-07 reference price to a session high of 156-12. This rally quickly failed, and the subsequent drop below the reference price gave us our short sell signal.
The initial stop loss for our short was above the session high- taking that out would be a signal of trend reversal up. On the selloff, the Wednesday / Thursday double bottom at 155-15 held as support (it was a “reference price” or what I consider a “pivot point”) until it was taken out around 8:45, leading to a break to the session low of 154-30. If you had held on to short positions, the recovery off the low was unable to rally above 155-21, the 50% retracement of the post-NFP selloff, which resulted in another leg down.
Early morning reports offer opportunities however it’s not always crystal clear which markets to focus on. For STI, part of my work the night before is to look for the best setups, then the following morning I look at the setups again, to see which setups still look good, and to see if anything new has come up. Then it’s a matter of figuring out the entry price and stop loss – both ahead of time. After the report, watch to see if we’re into the trade and as it starts to move moving stop losses and finding new reference prices as the market moves. If the trade entry isn’t hit, we decide whether we would want to take the trade later and keep the orders working or cancel them depending on how it looks.
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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