For the EMini S&P futures, yesterday was the Sell Short day of the Taylor Trading Technique (TTT) cycle (I wrote about that HERE). That meant we anticipated a TTT Buy day for Wednesday, and so far this has worked well.
Tuesday wasn’t a textbook Sell Short day, as the market didn’t close much lower than the open and the close was relatively high in the daily Range. Regardless, the TTT cycle told us to anticipate a Buy day for Wednesday, and the ROC indicator (bottom panel of the daily chart) had dropped to a buy signal level as well. Overnight we saw a failed rally below the Tuesday low, the “low violation” signal of a TTT Buy day. That makes things interesting for the day session when I trade- would we look for another break below the previous day low to be our buy signal, or would we look to go long regardless of whether or not it made another low violation.
When I got into the office to write the morning note for Swing Trader’s Insight, the Dec. EMini S&P was trading around 2585.00, and a drop back to the Tuesday low of 2580.75 seemed kind of unlikely. So my morning comment for the ES was: Taylor Trading Buy day, 2580.75 is the reference price. There was a low violation buy overnight; will we get a second opportunity? We could also watch the last overnight low of 2582.50 if it doesn’t make the Tuesday low. 2586.75 is a pivot point for the rally.
I wanted to cover a couple of possible scenarios. If we got another test of the Tuesday low we would look to buy for a standard TTT Buy day pattern. I also suggested we watch the 2582.50 low that was made around 6:45 AM CT. The important thing was to look for a failed move against structure; if a selloff failed against a higher low then we might get the rally we expect for a TTT Buy day.
The market did sell off from the 8:30 AM open, dropping to 2581.50 around 8:50. This is where the selloff stopped, and the subsequent rally back above the reference price was our trigger to buy. Our initial stop loss could go below the day session low, and the higher lows made over the morning illustrated the uptrend and shows why it can be rewarding to stay with trades as long as the market is trending in your direction.
Essential Guide for Futures Swing Trading
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