Yesterday gapped up and created a 3 day island bottom. I have been saying for 2 weeks that there would be a reversal up to above 2706.00. The Emini is above that level in the Globex session.
That is 20% down from the high. As long as the Emini is below it, the Emini is in a bear market. After a parabolic wedge sell climax and an extreme 34% selloff, there were going to be value bulls coming in. Also, the bears would take profits. That 20% correction level was close enough to be a logical target.
Can today be a big bear trend after yesterday’s wedge rally to last week’s high? Probably not because yesterday was a Bull Surprise Bar on the daily chart. That typically leads to at least a small 2nd leg sideways to up.
However, since the Globex session reach my minimum target of 2706.00 and the 2 day rally was extreme, today will probably have a lot of trading range price action.
Overnight Emini Globex trading
The Emini is up 83 points in the Globex session. There will, therefore, be a big gap up today. The Emini is now above that 2706 target that I have talked about for 2 weeks. It is also near a 50% pullback of the bear trend. Therefore, the bulls will probably begin to take some profits and the bears will begin to scale into shorts. This reduces the chance of a big bull trend day today.
Also, when there is a big gap up, the Emini is far above the 20 bar EMA on the 5 minute chart. Traders do not like to pay far above the average price unless the bars on the 5 minute chart are far above average. If the 1st few bars are not big bull bars closing near their highs, many bulls will wait for the Emini to go sideways or down until it gets near the EMA. They will then look for a possible wedge bottom or double bottom around the EMA.
If the bears see the hesitation on the open, they will look for a double top or a wedge top to sell, expecting a test down to the EMA. Less likely, that selloff could grow into a bear trend day, or the day could begin with a bear trend from the open.
Since there is confusion when a buy climax reaches an important target, there is an increased chance of a lot of trading range price action today.
Yesterday’s setups
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 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 Emini.