Trade or Fade (one of my futures trading advisories) said the eMini S&P futures had a breakout setup today. Yesterday was the narrowest trading range of the previous four sessions and yesterday’s bar was a doji. These combine to indicate that the market was indecisive yesterday; this indecision often resolves itself into a decisive move the following day.
The daily chart and last nights Trade or Fade report for the September eMini S&P are below. On the chart I drew the blue dotted line at the July 30th low of 1083.50. Last week I viewed that low as a pivot point, and it spent the past three days rotating around it.
Trade day means breakout setup
the blue dotted line was a pivot point
When I label a price level a “pivot point” I am watching the market’s action around that price to see if a move through it is accepted by follow through or rejected by a reversal. Thus when the market had a breakout setup today I expected it would either reject trade below there and rally, or accept it and break. Either move was likely to see follow through; we let the market decide which way it wants to go and got with it.
The intraday chart below shows today’s action. I labeled three potential breakout prices today: yesterday’s high of 1081.50, the aforementioned 1083.50 and the first Trade or Fade resistance at 1087.75. I would be looking to buy a pop over any of these prices.
a couple of breakout points today
You would have had to get long early to buy at yesterdays high, at least early by Chicago standards. The 1083.50 level was a price magnet of sorts until around 9:30 when it finally rallied away from it. The rally at the AM stock market open stopped just short of the first Trade or Fade resistance before rallying over it around 9:45.
I have two initial profit targets for today. First, the 1097.00 level is a 50 percent retracement of the selloff from the August 5 high. In the same area 1098.25 is the second trade or Fade resistance.
Identifying and trading these kinds of breakouts are one of my favorite trading setups. If you trade by another method or system, recognizing these kinds of breakout setups may keep you from standing in front of the runaway train some morning.
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.
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