Taylor Technique Buy day in eMini S&P Futures

by Scott Hoffman on August 27, 2010

Today was a Taylor Trading Technique (TTT) Buy day for the S&P futures.  It turned out to be a great example of what a Buy day should look like.

(I write a futures trading advisory called Swing Trader’s Insight using the TTT.  See more about STI here).

The daily chart for the September eMini S&P futures is below.  By the TTT, a Buy day occurs at the end of a market selloff. On a Buy day we anticipate the market will trade below the previous day low (the reference price) then rally back over it, marking the low and trend change.  We look to go long as the market trades back above the previous session low.  Note as well that this morning’s selloff held just over Tuesday’s low as it was unable to press below recent lows.

ESU daily Aug 27 300x174 Taylor Technique Buy day in eMini S&P Futures

Buy day, held the recent low

The ten minute chart shows how today went.  The last selloff through Thursday’s low occurred around 9 AM as Bernanke’s Jackson Hole speech started.  This turned out to be the end of the selloff, as sellers were unable to push it below Tuesday’s low.  The buy occurred as they rallied back up above Thursday’s low at 1043.00.

ESU Intraday Aug 27 300x174 Taylor Technique Buy day in eMini S&P Futures

that's a Buy day!

The initial stop for this trade went under today’s low at 1037.25.  For intraday profit targets I was looking at 1049.25 (midpoint of yesterday’s high to today’s low) and 1055.58 (the trend line off the two recent daily swing highs).  Yesterday’s high at 1061.75 would be the next target.

Assuming the market closes with gains today, Monday would be a Sell day.  On a Sell day we anticipate upside follow through, looking to liquidate long positions at the previous session (today’s high).  In practice, I don’t usually want to take overnight risk; so I would normally take a profit today and look for a new opportunity the following day.

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.

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  • Greg

    Scott, couple of questions . Where do you get the reference pt. from and what does it represent? And why 2 sets of fib retracements? These are all on 1st chart. Thanks, Greg Stoner

  • Anonymous

    On a Buy day the ‘reference price’ is usually the previous session low. On a Buy day what we anticipate is an early session move below the reference price, as the selloff runs out of energy. At this point the market reverses; the subsequent rally through the reference price is the trigger for a long entry. By waiting for a rally we’re not trying to “catch a falling knife”, we’re going long after the trend has reversed.

    I put up the two Fib retracements to show 50% retracements of the selloff from the 8/18 high and Thursday’s high to the Friday morning low. I view the 50% retracement level as a dividing line between a reaction move and a trend change. Those two specific retracements were to show where I saw resistance points and rally targets.

    Thanks for the questions!

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