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Emini: 2nd Outside Bar Buy Signal For Minor Up Reversal

Published 05/16/2019, 01:02 PM
Updated 07/09/2023, 06:31 AM

Pre-Open Market Analysis

The Emini yesterday formed an outside up day. This is the 2nd one in a week. A 2nd bottom attempt has a higher probability of success. There is an increased chance of a bull trend today and of a gap up.

However, the 3-week bear channel is tight. Consequently, even it the Emini rallies over the next week, it will probably form a lower high. A 2nd leg sideways to down is likely before the bulls get their new high.

Overnight Emini Globex Trading

The Emini is up 10 points in the Globex session. Today therefore might have a small gap up. Small gaps typically close in the 1st hour.

However, because of consecutive bottoms on the oversold daily and 60 minute charts, the odds favor a rally for at least a few days over the next week. It might have begun yesterday. Consequently, day traders should be ready for an increased chance of a bull trend day today.

In addition, even if the day is a trading range day, if the daily chart is beginning a leg up, there is an increased chance of a close near the high of the day. Day traders should look for a buy setup in the final hour for a late rally.

Finally, whenever the odds of a bull trend are higher, so are the odds of a bear trend. This is because when something seems likely, there is the potential for a crowded trade. Many traders might buy early, betting on a trend. If one does not develop, they might sell and not buy again today.

The absence of buyers could then lead to a bear trend on a day that was likely to rally. If the Emini enter a bear trend, it could last all day. But, the odds favor at least a weak bull trend today and a few days of sideways to up trading.

Yesterday’s Setups

Emini S&P 500

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. I rarely also show limit order entries and entries on the close of bars. Buyers of the Brooks Trading Course have access to a much more detailed explanation of the swing trades for each day.

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