It’s an interesting day for the eMini S&P futures. Yesterday was clearly a Taylor Trading Technique Buy day. Friday and Monday were bearish days, with both having closes lower than the open. Monday’s close at 1324.75 was at May’s low of 1325.25, and the narrow trading range (NR4 day) kept some bearish momentum for yesterday. The first half of yesterday saw a push from the session high down through Friday’s low (the “low violation”) and then a subsequent rally to close at Monday’s low.
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I see two potential roadmaps for today’s action. First, if you view today as a TTT Sell day, I would anticipate a rally to Monday’s high, which is the Sell day objective. We got that move overnight; there was a steady rally from the Globex open, reaching 1332.00 by about 12:30 AM CT. They sold off again, and appear to be trading back to the overnight high / Sell day objective. So playing for a rally to yesterday’s high was the first scenario.
The other scenario is where it gets interesting. Yesterday closed very much in balance. Yesterday was a doji, it closed in the middle of the range, and it had the narrowest range of the previous four days. This means we could also anticipate a breakout setup today.
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If we treat today as a breakout day, we’d be looking to go long on a move over resistance, or sell a break below support. On the upside, the logical breakout point is the high at 1332.00. Thus, If you played today as a Sell day, you might look to hold on to long positions on another move over 1332.00 , looking for the rally to continue as a breakout. Note as well that 1331.88 is a significant Fibonacci retracement point; a move back over it would help the bulls’ cause, which argues for a breakout buy.
On the downside I’d now watch the overnight low at 1324.50. 1324.00 is Fibonacci retracement support hat held overnight; I’d anticipate that a break under there would see downside follow through.
Edit: I thought I’d put up the intraday chart showing the rest of the day – the breakout trade ended up working. They cleared Tuesday’s high around 9:30; that high was support for about 2 hours before the next up move. I drew the two red dotted lines to show other prices consolidations that led to new mini breakout rallies. By late afternoon they made a double top in the 1340 area. If you are still long, I’d watch that area as the next potential upside breakouty point, with stops under the afternoon double bottom at 1334.75. Today was an example of why I usually don’t like to look for prifit targets, or at least treat them as pivot points rahter than hard and fast exit points. Profit targets are like trying to pick tops and bottoms – they’re often a mug’s game.
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I hope this analysis helps explain the TTT thought process I use for Swing Trader’s Insight. Feel free to add your comments or ask questions.
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The information contained here includes information from sources believed to be reliable and accurate, but no guarantee is made as to accuracy, nor do they purport to be complete. Opinions are subject to change without notice. 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.
