In last night’s edition of Swing Trader’s Insight I labeled the May soybeans as having a Taylor Trading Sell Short day for Wednesday. In this morning’s note for STI I reiterated the Sell Short day call; that signal worked well today.
This week was a good example of how the rhythm of the Taylor Trading Technique (TTT) works. On Monday, soybeans had a Taylor Trading Buy day, which resulted in a rally. Tuesday saw upside follow through on the Sell day of the TTT cycle, which meant the TTT would anticipate a Sell Short day for Wednesday. That’s one of the things I like about the TTT; understanding the cycle can help us to know a market’s likely direction of movement for an upcoming session.
For the May soybeans today, we would first look for an initial rally above the previous session high. This would mark the end of the upside momentum of a rally, which would be followed by the start of a selloff. The second move, back below the previous day high, would be our trigger for a short sale in anticipation of a bigger selloff.
The 8:30 AM open was 1051-0, and by 8:45 it rallied above the Tuesday high; a subsequent move back below the Tuesday high was our signal for the short sale. The initial stop loss would go above the session high of 1054-0 – we would want to exit the trade if the market made a new high, as it would indicate a renewal of upside momentum.
An orderly selloff took place for the balance of the session, with the market closing near the low of the day, as we would expect on a textbook Sell Short day. Given the size of today’s selloff, I would look to take most profits, although a break of Fibonacci support at 1031 could end up leading to more downside.
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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