A number of markets had breakout setups for today. Often times when a market is set up for a breakout, other correlated markets have this setup concurrently, which is logical. Today there were breakout setups in the EMini S&P, NASDAQ, T Bonds, gold and crude oil futures. This often gives multiple trade opportunities in the same session; let’s look at today’s trade in the ES.
Today’s setup wasn’t the “purest”, as the market closed higher than the open and closed near the top of the daily range. (An “ideal” breakout setup doesn’t show much directional movement.) However, the strength of the market’s uptrend and the buy signal in ROC (the 3 period ROC, bottom panel of the daily chart) kept us interested in this trade – an upside breakout would give us a trade entry in the direction of the market’s trend.
EMini S&P Daily
For an upside breakout trade, our standard reference price is the previous day high. Specifically. We look to go long when the market trades above the reference price, anticipating this initial push will serve as the start of a larger move in that direction.
I generally don’t trade the stock index futures before the 8:30 AM open; I find this helps us avoid whipsaw moves and we also often see early day session retracements that give us additional opportunities for a trade entry.
The 8:30 open was 2751.00 and the market quickly dropped back below the Monday high. These two selloffs gave us the opportunity to go long- specifically, we look to buy when the market trades back above the reference price, as this is our confirmation that the market is making the move we anticipate. Notice that the 9 AM low at 2748.00 makes a double bottom with the low from 10 minutes previous. If you didn’t get these early entries, you got a third opportunity about 50 minutes later when there was another successful test of the reference price.
EMini S&P Futures
The rally took hold after this last test of the reference price support as the market moved higher over the morning. Today is a good example of why it’s often a good idea to be patient with holding breakout trades. They often create a positive feedback loop, gaining momentum as they move farther away from the initial point as more traders identify the move and either close out increasingly losing trades or enter new trades in the dominant direction.
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.
THIS MATERIAL HAS BEEN PREPARED BY A DANIELS TRADING BROKER WHO PROVIDES RESEARCH MARKET COMMENTARY AND TRADE RECOMMENDATIONS AS PART OF HIS OR HER SOLICITATION FOR ACCOUNTS AND SOLICITATION FOR TRADES; HOWEVER, DANIELS TRADING DOES NOT MAINTAIN A RESEARCH DEPARTMENT AS DEFINED IN CFTC RULE 1.71. DANIELS TRADING, ITS PRINCIPALS, BROKERS AND EMPLOYEES MAY TRADE IN DERIVATIVES FOR THEIR OWN ACCOUNTS OR FOR THE ACCOUNTS OF OTHERS. DUE TO VARIOUS FACTORS (SUCH AS RISK TOLERANCE, MARGIN REQUIREMENTS, TRADING OBJECTIVES, SHORT TERM VS. LONG TERM STRATEGIES, TECHNICAL VS. FUNDAMENTAL MARKET ANALYSIS, AND OTHER FACTORS) SUCH TRADING MAY RESULT IN THE INITIATION OR LIQUIDATION OF POSITIONS THAT ARE DIFFERENT FROM OR CONTRARY TO THE OPINIONS AND RECOMMENDATIONS CONTAINED THEREIN.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE. THE RISK OF LOSS IN TRADING FUTURES CONTRACTS OR COMMODITY OPTIONS CAN BE SUBSTANTIAL, AND THEREFORE INVESTORS SHOULD UNDERSTAND THE RISKS INVOLVED IN TAKING LEVERAGED POSITIONS AND MUST ASSUME RESPONSIBILITY FOR THE RISKS ASSOCIATED WITH SUCH INVESTMENTS AND FOR THEIR RESULTS.
TRADE RECOMMENDATIONS AND PROFIT/LOSS CALCULATIONS MAY NOT INCLUDE COMMISSIONS AND FEES. PLEASE CONSULT YOUR BROKER FOR DETAILS BASED ON YOUR TRADING ARRANGEMENT AND COMMISSION SETUP.
YOU SHOULD CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES AND FINANCIAL RESOURCES. YOU SHOULD READ THE "RISK DISCLOSURE" WEBPAGE ACCESSED AT WWW.DANIELSTRADING.COM AT THE BOTTOM OF THE HOMEPAGE. DANIELS TRADING IS NOT AFFILIATED WITH NOR DOES IT ENDORSE ANY TRADING SYSTEM, NEWSLETTER OR OTHER SIMILAR SERVICE. DANIELS TRADING DOES NOT GUARANTEE OR VERIFY ANY PERFORMANCE CLAIMS MADE BY SUCH SYSTEMS OR SERVICE.
GLOBAL ASSET ADVISORS, LLC (“GAA”) (DBA: DANIELS TRADING, TOP THIRD AG MARKETING AND FUTURES ONLINE) IS AN INTRODUCING BROKER TO GAIN CAPITAL GROUP, LLC (GCG) A FUTURES COMMISSION MERCHANT AND RETAIL FOREIGN EXCHANGE DEALER. GAA AND GCG ARE WHOLLY OWNED SUBSIDIARIES OF STONEX GROUP INC. (NASDAQ:SNEX) THE ULTIMATE PARENT COMPANY.