In last night’s Swing Traders Insight, the EMini S&P futures were labeled as a breakout trade candidate for today. We anticipated a breakout move because of the inside day, range contraction and doji bar on Friday; in turn we looked for the market to make a directional move today.
The first reference prices for a breakout move are the previous session high or low – we look to go short if the market breaks below the previous day low or go long on a move above the previous day high. In either case we are looking for this initial move to serve as a springboard to a lager move in that direction.
For the stock indices I limit my trading to after the 8:30 AM CT stock market open; I find it has the most tradable moves and I can avoid overnight whipsaws. This is especially the case with Sunday nights, which I tend to view as a separate trading session.
Dividing it up worked well today. Early morning saw a small downside break below the Friday low of 2571.50, and they were trading below there as I was writing the morning note for STI. This morning’s comment for the ES was: “Selloff out of a breakout setup; the Friday low of 2571.50 is the downside reference price. On a rally watch 2578.00 as the first upside level.”
So for the day session we would be looking for a potential new breakout move. On the downside we would still watch the Friday low. On the upside I didn’t want to wait for the Friday high to get long so I suggested 2578.00, a 50% retracement from the Friday high to last night’s low, looking for a move above that level to continue a rally if it came.
By 9 AM the market had rallied as the early morning downside move didn’t see follow through. It cleared 2578, and rallied to 2582.25 in about 10 minutes. It heading higher over much of the balance of the session, finally stalling at the Friday high around 2:30.
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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