In this morning’s comment for Swing Trader’s Insight I wrote that I would look to short the November soybean futures if they broke the Thursday low. I try to get the morning comment out as early as possible. For this reason I don’t provide a lot of detail there; I thought I’d explain the setup now.
After yesterday’s USDA report, soybeans traded on both sides of unchanged, closing with a doji. Given the down trend (and a report that was construed as bearish), bearish momentum was likely to reassert itself if the market started moving lower. Additionally, ROC had risen to a 4 day high, giving a sell signal.
I used the Thursday low as an entry level – if the market broke below there it would signal the downside momentum was reasserting itself. The overnight session closed above that price so we could watch for a break after the day session open.
The 8:30 AM open was 840-2; the market promptly sold off from there. The market broke below our entry, rose back above it once and then sold off decisively. By just before 9 AM it dropped to a session low of 826-6 and then worked its way back higher.
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Essential Guide for Futures Swing Trading
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