Today was another example of how to use the overnight trading range to trade the grain futures markets in the day session – night session highs and lows can give extra reference prices to monitor market action.
Friday was an inside and NR4 day giving today a breakout setup. The primary downside breakout prices were taken out last night when many of us were still celebrating Labor day. By the end of the evening session it was well below those breakout prices, making a night session low at 1422-6.
Daily chart
On a breakout day we anticipate the market to continue moving in the direction of the breakout throughout the session, so in this case we would anticipate still lower prices for the morning session.
For the morning session there were two potential trades. More downside movement was more likely, continuing the overnight move lower. There was a long side setup. With last night’s session high at 1434-4 there was a half cent gap to Friday’s low at 1435-0; a rally back up to fill in the gap would give an “Oops” trade.
The morning session had a lower open at 1428-6; it traded down to a new session low at 1422-0 before bouncing. You could have either sold that break, or if you were conservative, shorted when the first morning session low at 1422-0 was taken out. The intial stop loss went over the morning session high at 1428-6.
The first downside profit target and reference price was the 19 July high at 1409-4. Breaking this level led to the rally to last week’s contract high so we would now expect it to be support. This level was reached by about 10:30 AM; regaining it was a signal to cover shorts. A Noon selloff made a higher low at 1410-4 and reiterated that a rally was likely.
5 minute chart
This is a sample of the analysis from my Swing Trader’s Insight advisory service. For information on STI, and to sign up for a free two week trial, visit 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.
