Yesterday’s range contraction and doji bar gave gold futures a breakout setup for Wednesday, yielding a strong downside move this morning.
Taylor Trading Technique
The Taylor Trading Technique normally uses the previous session high and / or low as reference prices- levels to gauge market action and make trade entries and exits. However there are times when previous market highs and lows can give us a better picture of market action, helping us make better trading decisions.
In last night’s Swing Trader’s Insight I labeled the EMini S&P futures as a Taylor Trading Technique Sell short day. As long time readers know, I suggest we trade the stock index futures during the stock market hours (beginning at 8:30 AM CT) and that we can use overnight highs and lows in lieu of the previous day high and low that the TTT normally uses for the reference price.
The recent down trend in stock index futures made Taylor Trading Technique signals less obvious. Sticking to a more mechanical cycle count can facilitate trading in these markets.
The EMini S&P had an NR7 day (narrowest trading range of the previous seven sessions) on Tuesday. This pattern told us to anticipate a breakout move today, which gave us a good trade opportunity this morning.
In last night’s edition of Swing Trader’s Insight I listed the EMini S&P futures as having a Taylor Trading Technique Buy day signal for today, and I reiterated that signal in this morning’s STI watch list. Here’s how I approached it.
The Taylor Trading Technique seeks to identify market actions (moves) and then anticipate likely reactions in the opposite direction. The past two sessions in the soybean futures have been a good example of the action – reaction cycle.
In this morning’s watch list for Swing Trader’s Insight I commented that a rally above yesterday’s high could see follow through. This turned out to be a good trade opportunity; let’s take a look at it.
A large percentage of traders tend to do the wrong thing at the wrong time- emotion gets them to buy at the highs and sell at the lows. The Taylor Trading Technique seeks to anticipate and profit from situations where emotional trading is likely to occur. This gave us a good trade opportunity in crude oil today.
This is the morning update of Swing Trader’s Insight, a daily futures trading advisory published by Scott Hoffman.