The eMini S&P futures were on the Sell Short day of the Taylor Trading Technique cycle today. Trending markets are a double edged sword for the TTT – they are the kind of markets we want to participate in however they often show only shallow retracements against the trend, which can make it challenging to find entries.
In last night’s edition of Swing Trader’s Insight I labeled the ES as a Sell Short day. This came from a TTT cycle count; Thursday was the Buy day, making Friday the Sell day and Monday was the Sell Short day in turn.
For this morning’s note for STI, my comment for the ES was: It’s a Taylor Trading Sell Short day although there isn’t a clear setup for it. Aggressive traders might watch for a failed rally above the last overnight high of 2889.75. I suggested this price level because while we wanted to see some sort of a failed rally to trigger a short sale, the market was unlikely to rally back to either the overnight high or the standard reference price of the previous session high. A down trending market would be less likely to reach back up much, and we wouldn’t want to wait for something that wasn’t likely to come in order to get in on the trend.
The 8:30 AM open was 2881.25, and by 8:50 the market rallied above the 2889.75 reference price. We had two opportunities to get short; first around 9 AM and hen again after 9:30 AM. For the pre 9 AM entry we would use a 6 point stop loss, which placed our stop loss above overnight high resistance at 2896.00. For the 9:30 entry we could use a stop loss above the 2893.00 day session high and double top.
A sharp morning selloff ensued, breaking the Friday low by 10:40 and making a session low of 2866.00 about ten minutes later. Given the market’s strong down trend, I would want to keep a relatively loose stop for any remaining positions, looking for another run lower today.
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