Today is a Taylor Trading Technique Buy day for the EMini S&P futures. Treating today as a normal trading day gave a decent buy this morning. If you treat the Sunday night trade as a discrete trading session gave earlier and lower long entry.
Last week, breakout setup days on Wednesday and Thursday yielded a big downside move on Friday. This sell off, the Sell Short day of the Taylor Trading cycle meant we would anticipate a Taylor Trading Buy day for Monday.
For a Taylor Trading Buy day we use the previous session low as the normal reference price for our entry- a failed move below the previous session low is our trigger for a long entry. For Swing Trader’s Insight I suggest we adjust this a bit- we look at the overnight trade as a separate trading session, meaning we can use overnight highs and lows as additional reference prices for trading the day session, which is the period I trade stock indices.
Sunday night saw downside follow through from the Friday selloff, as the March ES made a session low of 2733.00. This low was made shortly after the Sunday night open; it then made a higher low at 2735.00 just after 6 AM. We could use these lower lows as early entry reference prices for a Taylor Trading Buy day, as I noted in the STI morning note.
The 8:30 AM was 2739.25, and it promptly dropped below the 2735.00 low. The subsequent rally back above this low was our trigger to go long. The initial stop loss could be tight, below the session low of 2733.00. Our trade was based on having momentum in the direction of our trade; if the market fell back to make a new low it would show the momentum was long longer up.
The market showed a strong rally off the open as it pushed above the Friday low / TTT reference price at 2755.25 on up to a session high of 2763.00. By this time you should have tightened up your stop enough to end up getting out with a large percentage of the morning rally, and I would be on to looking for other markets to trade today.
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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