Following yesterday’s post on the S&Ps (read here) I thought I’d take a look at what we’ve done today. There are some good examples of the type of things I look for in trading, especially as it relates to the Taylor Trading Technique.
The daily chart for the September eMini S&Ps is below.
- click to enlarge
In yesterday’s post I said that today would be the Sell Short day in the cycle. On a Sell Short day, we look for the market to trade above the previous daily high, then reverse and trade lower. Yesterday’s high was 1059.75. I was also watching the 1066.13 level; this was a 50% retracement of the selloff from the June 21 high to the July 6 low. I view 50% retracement levels as critical levels for market moves, as I’ve always thought that it marks the dividing line between a reaction move to an existing trend and the point where a trend may be reversing.
So the 1066.13 level was the dividing line for today. An early rally attempt failed, as would be expected on a Sell Short day, and we would be short from under the 1059.75 level.
What will we be looking for tomorrow? Well, assuming they close without extending the range, we will have a narrow range day today; the narrowest range of the previous seven days. If this is how it closes, I would be looking for a breakout move tomorrow. Breakout points would be today’s high and low-1054.00 on the low side (if a new low isn’t made today) and today’s high of 1067.75 on the upside.
For tomorrow, the upside is interesting because it would mean the Fibonacci retracement level at 1066.13 was taken out again (the rally continues) or the selloff resumes, which could lead to a retest of the 1040 support area. A big selloff would likely mean the June selloff is resuming.
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.
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