On Monday I wrote about a Taylor Trading Buy day in soybeans (read that HERE). Soybeans consolidated on Tuesday (in spite of a USDA report); it was an inside day and an NR4. These patterns told us to look for a breakout, directional move for Wednesday.
When a market has a breakout setup, we look for an early session move past close in support or resistance to serve as a springboard to a larger move in that direction as a positive feedback loop develops. (The move away from an equilibrium point sees increasing momentum the farther it moves from the initial level.)
The most logical levels to look for breakout triggers are the previous session’s high and low – they are the prices at which traders felt the market got “too cheap” or “too dear”. A move past these levels is a tipoff that a different type move may be starting.
So for July soybeans we used the Tuesday high and low as our first trigger levels. Conservative traders could use the Monday high and low as they served as the high and low for the week. Beans stayed within these levels for the Tuesday night session,
The day session open was 862-2, and it rallied above both levels within the first five minutes of the session, which triggered long entries. We could place out initial stop loss below the day session low and open of 862-2.
Soybeans went back to retest the Monday high about a half hour into the session, then they took off as the newest weather forecasts showed continued wet weather to hamper soybean planting.
The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.
Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.
© 2021 StoneX Group Inc. All Rights Reserved