Using Recent Action in eMini S&P Futures to Anticipate Tomorrow’s Direction

by Scott Hoffman on January 30, 2013

I’ve written a couple of blog posts about trading the eMini S&Ps using the methods I employ for my Swing Trader’s Insight Advisory. The eMinis are not the only market I follow; I cover 23 markets for STI and I focus on whatever markets have what I judge to be the best setups at the time.

There are two reasons I’ve been focusing on the eMinis.  First, I know that a large percentage of futures traders follow and/or trade the eMinis so hopefully what I write makes sense in that it’s a market that traders are already familiar with.  Second, as it turns out, the eMinis have followed a very logical path for the past few days so I thought the current patterns would make for good trading lessons.

ESH daily Jan 30 300x196 Using Recent Action in eMini S&P Futures to Anticipate Tomorrow’s Direction

In yesterday’s post (read it here) I wrote that the eMini futures had a breakout setup for Tuesday’s trade.  I didn’t think there would be much of a trading opportunity there yesterday but there was a breakout rally after it cleared the 1500.00 high from the previous session.

Looking at the daily bar it’s obvious that yesterday was a bullish session-it opened nearer the low of the session and closed right on the top. This is the kind of trade to anticipate on a breakout day; we expect the market to make a one way move over the session.

ESH intraday Jan 30 300x197 Using Recent Action in eMini S&P Futures to Anticipate Tomorrow’s Direction

Yesterday’s breakout rally meant that for today we should anticipate a Taylor Trading Technique Sell Short day in the following session as a breakout move is likely to “overshoot value” and create the “excess high” that marks the end of a move.

We got a Sell Short day move over the course of today’s session. Overnight it moved slightly over Tuesday’s high (the “high violation of a TTT Sell Short day) and right after the stock market open there was a quick rally to 1505.50 for a second chance to short it.

As might be expected, there wasn’t a lot of action ahead of the 1:15 PM release of the FOMC communique.  The selloff took a while to get going but by in a little under an hour it slid below the 1498.50 overnight low and continued lower for the rest of the day. That selloff continued after the 3:15 close as it made new lows before the 4:15 close.

Looking ahead to Thursday, today’s selloff and low range close tells us that we should anticipate a TTT Buy day for Thursday. I’d watch the 1491.50 level as a reference price as it had been resistance last week and then support the past two days.

The past couple of days show the utility and logic of the Taylor Trading Technique as we can use a market’s behavior to identify a market’s swings and we can then use a combination of the previous swing to anticipate what’s coming up and price to determine if the market is doing what we anticipated. When a market meets both these conditions we can trade with confidence.

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.

THE RISK OF LOSS IN TRADING COMMODITY FUTURES AND OPTIONS CONTRACTS CAN BE SUBSTANTIAL. THERE IS A HIGH DEGREE OF LEVERAGE IN FUTURES TRADING BECAUSE OF SMALL MARGIN REQUIREMENTS. THIS LEVERAGE CAN WORK AGAINST YOU AS WELL AS FOR YOU AND CAN LEAD TO LARGE LOSSES AS WELL AS LARGE GAINS.

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