In this morning’s comment for the EMini S&P, I noted that it had two setups for today. These two setups anticipated the market moving in opposite directions. Luckily, we didn’t have to guess as to the move’s direction, we let the market decide and go with it.
First, by a Taylor Trading cycle count today would be a Sell Short day, which would be a failed rally above the previous day high and then a subsequent selloff. We would look to short when it fall back below the previous day high.
The other pattern was a breakout setup, as Monday was an NR4 day. For this pattern we would look to go long when the market traded above the previous day high, looking for that to be the kickoff to a larger move in that initial direction.
I usually like to trade stock indices during the stock exchange hours, looking to take trades after the 8:30 AM CT open. Sometimes trading the premarket session gives you a head start on a day session move but I find that more often the premarket makes fake out moves and the day session often gives you a second chance to catch moves that are missed earlier.
For the June EMini S&P, the 8:30 AM open was 2915.50. It fell to 2912.75 before rallying back above 2915.75, the Monday high. This rally was our trigger for a long entry for the breakout trade, which got us in about five minutes after the open. It never dropped back below the Monday high, so the Taylor Trading short was never triggered.
For our long position, the initial stop loss could go below the day session low of 2912.75. For a breakout trade, we want to hold our position as long as the market momentum is in our favor, and breaking the low would be a signal of a momentum reversal.
The market has trended higher over the morning. The recent high of 2923.50 was a pivot point to watch; clearing it gave the market new fuel for the rally. As we are into new high territory I would continue to trail stop losses higher as there is no old price level to view as a target.
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Breakout Futures Trading Guide - Written by veteran futures trading professional Scott Hoffman, Breakout Futures Trading Guide explains the exact chart patterns you can use to identify futures markets that may be set up for trading sessions with large directional moves the day before they happen!
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