In last night’s edition of Swing Trader’s Insight I labeled the EMini S&P (among many markets) as having a breakout setup for today. From a chart standpoint the ES had a breakout setup because Thursday was an NR7 day. From a market psychology standpoint it was logical to look for a breakout move today if we got a monthly employment report that was enough of a tail result to lead to a large change in the market’s perceived “value”.
Normally we would look at the previous day high or low as breakout reference prices looking to go long on a rally above or short on a break below the extremes of yesterday. However, I usually don’t enter S&P trades until after the 8:30 AM stock market open, and the market was well above the Thursday high going into the open, so we had to look for another setup.
There were two potential setups to look for this morning. First, we could look for a pullback to the post payroll report low of 2750.00 – nice round number support. Second, we could use the breakout principle and buy a rally above the session high of 2759.25. This would tell us that the upside momentum was still in force and the rally was likely resuming.
The market did come down a bit after 8:30 but was unable to reach the 2750 support, showing the market’s strength. By 9:05 AM it rallied above the session high, triggering our long entry. We could have stayed long for the duration of the session; on a five minute chart I didn’t see a lower high or a lower swing low through 2:15.
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 third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.