Soybean futures were on the Buy day of the Taylor Trading cycle today. After an overnight selloff, the day session open gave a good opportunity to get long for the ensuing rally.
Following an NR7 and inside day on Monday (range contraction patterns), March soybeans had a breakout setup for Tuesday. Tuesday then had a downside breakout, showing a good selloff after breaking below the Monday low.
Breakout moves often create “unfair” highs and lows (to use Market Profile terms) as they are moves that tend to push markets to levels that make them “overbought” or “oversold”. The Taylor Trading Technique seeks to take advantage of these “unfair” levels to trade a potential reversal.
In this case, the downside breakout move on Tuesday meant we would anticipate a Taylor Trading Buy day for Wednesday. On a Buy day we initially look for an initial move below the previous day low. We then look to go long if the market reverses and trades back above the previous day low.
For soybeans, the market leaked lower overnight, moving lower into the AM halt as the US Dollar rallied. It ended below the Tuesday low, so we would watch what it did for the day session open.
The 8:30 open was 1041-2, and the overnight low of 1040-2 held in the first minutes. Within a few minutes it rallied above our 1042-4 reference price, triggering our long entry. The initial stop loss could be placed below the session low of 1040-2.
Beans rallied through the day session, reaching Tuesday’s high around 10:45 AM. This proved to be support, and the NOPA crush data (released at 11 AM) gave the rally another five cents by the close.
Try Swing Trader’s Insight for 14 Days
Swing Trader’s Insight Trial - This swing trading resource is designed to help you improve your trading skills and make you aware of trends and new potential opportunities in the commodities markets. Regardless of your current skill level, access to this exclusive swing trading information will enhance your trading experience.
Swing Trader’s Insight includes access to premium web content.
Swing Trader’s Insight includes an email newsletter subscription.
Swing Trader’s Insight trial lasts 14 days.
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.
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.