On many occasions, the first Friday of the month is a good day for trade setups, especially breakouts, as the significance of the labor market causes traders to stay out of trades before the release, which in turn causes a sudden jump in trading interest and concurrent large directional moves afterward. This week, however, saw enough other news- the GOP tax plan, Trump’s candidate for Fed Chairman, and quarterly earnings reports- meant a lot of the big moves for the week were already made by Friday.
As a result I didn’t see many notable trade setups this morning. The EMini S&P was on a Taylor Trading Sell day so we could look to buy a break (or sell a rally if it came first) but I didn’t see a precise setup for it. T Bonds had a Taylor Trading Sell Short day, but that move came before I was writing this morning’s Swing Trader’s Insight watch list. Other markets didn’t show any setups or were not moving as I expected, meaning I wouldn’t be trading them.
I was disappointed in the paucity of breakout setups today, as I have just finished a report on identifying and trading them. After the stock market open I went back through last night’s Swing Trader’s Insight to look at the grains and livestock after their open. In doing that I was reminded of silver, the only futures market I had listed as a breakout trade candidate for today. It hadn’t yet broken out, so it was a market to continue to watch.
Silver futures had a breakout setup for Friday, as Thursday was an NR7 day and a doji bar. The chart was especially interesting as Thursday’s breakout setup came after the big rally on Wednesday. If a breakout move got started today, it could result in a big move if the rally resumed or if traders decided to sell to take profits. Additionally, Thursday’s low of 17.05 was a 50% retracement of the October selloff, making it a potentially significant pivot point.
Following roughly sideways trade for most of the morning, silver (and gold as well) began to sell off around 9:10 AM. This decline accelerated and by the time it broke below the Thursday low (our trigger price for a short sale) it was a rout, dropping to a session low of 16.77 by 10 AM.
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.
This material is conveyed as a solicitation for entering into a derivatives transaction.