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.
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