I’ll be looking for trade opportunities after the FOMC meeting; I usually don’t trade financial and other monetary policy sensitive futures ahead of the Fed meeting announcement. However, I did like today’s breakout setup in December live cattle, which gave us a good trade this morning.
I have been bullish on live cattle recently as the trend is up and it appeared to be making a flat top triangle on the daily chart. I tried to buy them on Monday however they couldn’t clear the 14 Sept. high and fell back so I ended up scratching the trade that day.
In spite of Monday’s failed breakout, I still liked the long side. There was now a double top, and if it could break through that level on a subsequent rally then a bigger upside move could be coming. Below is the chart I sent to STI subscribers this morning, along with a trade recommendation to buy it if it rallied above the 14 Sept. high of 113.92.
Dec. cattle had a breakout setup for today as Tuesday was an ID/NR7 day with a doji bar. The Tuesday high of 113.50 was the first upside breakout level; this was cleared on the open. It traded sideways for a time, then rallied above the 113.92 entry level around 9:20. This triggered our long entry, and the initial stop loss went below the 9 AM low of 113.45.
By 9:55 AM it made a session high of 114.95; I suggested taking partial profits around there in case the market failed (as it did on Monday) and fell through the bottom of the morning channel. It cleared this high about 40 minutes later, and proceeded to move up to just short of limit up later in the session.
Essential Guide for Futures Swing Trading
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STOP ORDERS DO NOT NECESSARILY LIMIT YOUR LOSS TO THE STOP PRICE BECAUSE STOP ORDERS, IF THE PRICE IS HIT, BECOME MARKET ORDERS AND, DEPENDING ON MARKET CONDITIONS, THE ACTUAL FILL PRICE CAN BE DIFFERENT FROM THE STOP PRICE. IF A MARKET REACHED ITS DAILY PRICE FLUCTUATION LIMIT, A "LIMIT MOVE", IT MAY BE IMPOSSIBLE TO EXECUTE A STOP LOSS ORDER.
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