Friday saw the USDA release its estimate of planted acreage for US corn and soybeans for 2018. Soybeans has a breakout setup ahead of the report and then saw a strong rally after the USDA forecast showed they expect lower soybean acreage this year. That breakout rally was a good trade opportunity; I wrote a blog article about it HERE.
Normally, the Taylor Trading cycle goes Buy day – Sell day – Sell Short day. Thus, a Buy day rally like Friday’s would then be followed by some upside follow through on a Day Two rally before a Sell Short day break on Day Three.
However, we often view breakout rally days differently. Rather than taking two days to reach a short term peak, the size and strength of a breakout rally often expends the bullish momentum in the first day, setting the stage for a Taylor Sell Short day on Day Two.
In last night’s edition of Swing Trader’s Insight, the May soybeans were listed as a Sell Short day. The Sell Short day meant we would look for a failed rally above the Friday high, with a subsequent move back below the Friday high being our trigger for a short sale.
On Sunday night, soybeans saw follow through rally, as Friday’s strong close continued to attract buyers. They topped out around 4 AM CT and then worked lower into the 8:30 AM day session open. Had the market stayed higher near the day open I would have considered using it as a higher reference price for a short sale, although we didn’t see this today.
As it was, the 8:30 AM open was 1053-2, and then fell below the Friday high about five minutes later, triggering our short sale. The initial stop loss went above the say session high of 1054-6, and trailed as the market moved lower.
If you missed the first sale, you got a second opportunity around 9 AM as it made another failed move above the Friday high. It has then trended lower over the morning- the intraday series of lower highs and lower lows made for an orderly selloff.
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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