Pre-open market analysis of daily chart
Yesterday showed 8 consecutive bear days on the daily chart. That happens only once every few years, and it is therefore climactic. Since it is sideways instead of down, it is not a sell climax. It is simply a pattern that has lasted a long time and is likely to end. Therefore, either today or tomorrow will probably have at least a small bull body on daily chart.
The bear bodies are a sign of repeated profit taking, but there haven't been enough to create a reversal down.
E-mini has been in at tight trading range for 4 weeks, so it's now in Breakout Mode.
Since we're in a bull trend, higher prices are always at least slightly more likely than a strong reversal down. However, the year long rally has been extreme, so traders should expect a 10% correction this summer.
On 60-minute chart, the 4-week trading range is a head and shoulders top. But a major top only has a 40% chance of leading to a bear trend; sideways or up are slightly more likely.
Overnight E-mini Globex trading on 5-minute chart
- E-mini was down 1 point in the Globex session, so it'll probably open within yesterday’s range.
- If it gaps down, that gap will be small, and small gaps usually close in the 1st hour.
- The trading range for the last 4 weeks has had at least one swing up and one swing down. Day traders will expect reversals again today.
- If there is a series of strong trend bars in the 1st hour, then we may wind up with a strong trend day, though a trading range day is more likely.
Yesterday’s E-mini setups
Disclaimer: Here are several reasonable stop entry setups from yesterday. I show each buy entry with a green rectangle and each sell entry with a red rectangle. Buyers of both the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).
My goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not currently in the market, these entries would be logical times for him to enter.
If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro E-mini.
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