As I said in yesterday’s Breakout Futures Trading webinar, yesterday was slim for breakout candidates. My breakout setups and patterns are based on volatility and trading range contractions, and there weren’t many markets with contracted ranges on Wednesday. However, things changed yesterday, as many markets showed range contraction. This meant that there were lots of breakout candidates today (For more information on Breakout Trading in futures, get a copy of my eBook here.)
Coffee futures were such a market today. In the daily chart below, I circled yesterday’s bar for December Coffee. You can see that yesterday was an inside day, the range had contracted from Wednesday, and it was a doji bar-all signs of range contraction. This meant we should be looking for a breakout, directional move in coffee futures today.
Yesterday’s bar is circled
Below is today’s Trade or Fade report for December Coffee futures. In the left side of the table are a set of support and resistance numbers. The pivot is today’s session open. The first support and resistance points, R-1 and S-1, are entry points for a breakout trade using Trade or Fade. The second and third support and resistance are profit targets for a breakout trade.
Trade or Fade Report for Dec. Coffee
The 5 minute chart for December Coffee futures is below. I labeled a number of potential entry prices in red. 141.77 is the up trend line from the daily chart, 141.24 is first Trade or fade support, and 140.30 was yesterday’s low. Any of these were potential entries for a breakout sale.
Once short, I would use an initial stop loss just over the session open at 143.25. ToF profit targets were 139.24 then 136.53. If you weren’t following Trade or Fade, the 136.50 are has held a number of times, and would be a good place to take profits. Entries and exits at the ToF points would have resulted in profits of $750 and $1766.25 respectively.
5 minute chart for coffee futures
For more information on trading breakouts in futures, check out 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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