An attendee at the webinar I did yesterday asked me about my comment this morning on bond futures. I said: “Sell Short day; the swing high at 118-01 is resistance. 117-24 is the reference price.” He asked me what I saw there. I started typing him an email, but I thought I’d put it up as a post instead.
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I labeled today a Sell Short day for bonds, By the Taylor count it should be a Sell day; looking for upside follow through to enhance profits from yesterday’s longs. I find that breakout moves often end up creating the ‘excess’ that marks the end of a run (an ‘auction’ in Market Profile parlance), so I look for an opportunity to sell in the session following a breakout rally. (When does a market look better than at the top of a screaming rally?)
On a Sell Short day; the previous session’s high is the reference price for a short sale, so the Taylor technique would have told you to sell after they dropped back through 118-00. You would have put your stop loss over today’s high of 118-09. Looking at the intraday chart, you can see that they chopped around 118 until the results of the 5 year T Note auction; they broke after that.
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I was watching the 117-24 level because it is a 50% retracement of the selloff from the Feb 6 high. If that level held; I thought (maybe over thought) that yesterday’s breakout rally signified a real change in sentiment, and there was only small money in getting short.
Anyway, wherever you got short, I’d now be watching 117-16 (the 20 day EMA) and 117-10 Fib support as downside targets.
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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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