T8 Retracement Trading: A series on technical trading with moving averages in the futures markets. (Part 6: Ten-Year Note)

January 30th, 2008 by Uncle Steve

For the next few weeks, we will examine opportunities in the futures markets that are dictated by price movement and an exponential moving average: the T8. In each example, we will be reviewing previous opportunities and speculating on how to become involved in the near future. All charts will be presented in the form of weekly candlesticks and will feature three moving averages and one momentum oscillator. As you will see, these simple tools can unlock the door to profits.

Part 6 features a chart of the Ten-Year Note using weekly time frames. We define “trend” as the direction of the T8. As we can see, the trend in the Ten-Year Note is definitely up. Our rules are simple. We only want to initiate trades in the direction of the trend. Therefore, rule #1: Initiate trades in the direction of the trend. Secondly, we want to buy weeks that open below the T8 when it is in an uptrend and sell weekly openings that are above the T8, providing the T8 is negative. Rule #2: Buy opening retracements to the moving average in the direction of the trend. That’s it. A simple approach to trading the futures markets.

Using this strategy, you could have bought the opening price during the following weeks at the prices stated: 10/13/07 @ 108 24/32 and 12/22/07 @ 112 4/32. At the time of this writing, The TYH (March Ten-Year Note) was trading at 116 10/32 (with a recent high of 119 3/32). These two opportunities are enjoying nice profits at the current level. The Ten-Year Note is not unique to this situation. Currently, over fifteen commodity futures contracts have demostrated similar patterns. You might want to read other blogs that discuss Crude Oil, Cocoa, the US Dollar, the Japaneses Yen and Coffee. These previous postings show the same circumstances and the subsequent profits resulting based these simple rules.

During the next three weeks, we sill see over two dozen examples of the same trading set up. THIS IS NOT A MAGIC TRICK. These specific circumstances happen again and again. We will examine precious metals, interest rates, grains, currencies and other interesting commodity futures for exactly the same set up.

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