By: John Crane, swing trading guru
Figure # 6.28 - I have always found it interesting that fundamental news and the swing trade dates can work in harmony. The September Cocoa is a great example of this phenomenon. Political unrest in the Ivory Coast caused the Cocoa futures market to breakout and race to new heights in late June and early July, but the roaring bull futures market came to an abrupt halt on the July 10 swing trade date. The futures market peaked at 1,737 on July 10 and closed near the top of the daily trading range. July 11, the trail day, traded to 1,738, one point above the previous high, before it fell back and closed at 1,730, warning of an end to the rally. The next day gapped lower and marked the beginning of a significant futures market collapse.
Figure # 6.27 – September 2006 Wheat
The swing trade date, combined with the trail day directional indicator, provided advance warning of the major reversal and selling opportunity in the September Cocoa. The trail day directional indictor warned of this price reversal three days in advance of the 230-point plunge in September Cocoa!
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