Teach Talk Trade Day Trading & Technical Analysis

T8 Retracement Trading: A series on technical trading with moving averages in the futures markets. (Part 8: 30-Year Bond)

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 8 features a chart of the continous 30-year Bond contract, using weekly time frames. We define “trend” as the direction of the T8. As we can see, the trend of 30-year Bond 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 third week of September at 110.375 and then again, the third week in December at 114.156.  At the time of this writing, the US 30-year Bond  was trading at 118.34. These two opportunities have turned out to be big winners since the first signal in September. The Bond is not unique to this situation. Currently, over fifteen commodity futures contracts have demostrated similar patterns.

During the next few weeks, we sill see over a 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.

Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Engergy issues ) & The Mechanical Monkey where we discuss our mechanical trades.