In this morning’s note for Swing Trader’s Insight, I said we should look for a Taylor Trading Buy day for the eMini S&P futures. Early session weakness was a good buying opportunity and the market saw a good rally today.
In last night’s Swing Trader’s Insight I was more cautious. Friday was a doji bar and the market closed relatively high in the range. I generally don’t trade eMinis during the overnight session (especially Sunday nights) and Friday’s bar could have resulted in a meltdown overnight.
Although I don’t trade it, I use the overnight trade to give direction for day session trades. Although the ES sold off overnight, it hadn’t blasted below the Friday low, and it appeared more likely the overnight selloff would suck in weak sellers, which would make good fuel for a rally if one started.
For a Taylor Trading Buy day, we use the previous session low as our “reference price” -we look for an initial move below the previous day low to be our heads up to anticipate an upside reversal, and a move above the reference price is our trigger for a long entry.
For the September eMini S&P, the 8:30 AM open was 2766.75, and the market immediately sold off below the Friday low (reference price) of 2765.50. Within 10 minutes it had move back above the reference price, where we went long.
The initial stop loss went below the session low of 2761.25 – if the market sold off and made a new low then we weren’t seeing the bullish momentum that had us buy initially. In this case, the low was never retested. After spending some time around the reference price, it rallied through the morning. If you held for that long, the double top at the 2678.00 session high (made around 1:25 PM) was a signal to take profits.
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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