Yesterday I wrote about the Buy day in the eMini S&P futures. Proving that the markets try to get you to do the wrong thing at the wrong time, late in the session they broke back to around where they opened, rather than the strong close we anticipate on a Buy day.
The cautious move yesterday would have been to sell out long positions at the end of the day yesterday. The key to trading isn’t in making money, it’s in not losing money. Preserving your trading capital keeps you in the game, and the winning trades will come to you if you stay in the game, provided your strategy is sound.
What to do today? As yesterday turned out, it had the narrowest trading range of the previous four sessions, it also was a doji. These conditions add up to indicate a market with a breakout setup, likely to make a directional move today.
For today’s breakout setup, there were two (very close) price levels to watch (see the daily chart below), Yesterday’s high at 1054.25 was one, then 1055.13 (the 50% retracement level of the range from Monday’s high to yesterday’s low was the other). A move over these points was the first trigger to buy.
breakout setup - the green trend line was big
There were two other upside points to watch for long breakout entries.. The Trade or Fade report for today (below) had the first upside breakout point at 1063.13. The other was the green trend line, drawn between the high in early August and the last swing high after the low of the move. This came in at 1065.18 and marked a likely trend change point.
Buy at R-1, sell at R-2
For profit targets, there are two in the current vicinity. First is Monday’s high at 1072.75; the first Trade or Fade profit target was 1074.50.
For more information on trading breakouts in futures, you can get more information on my Trade or Fade advisory here. For an in depth discussion of breakout trading, get a copy of my Breakout Futures Trading Method book here.
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.
