Pre-Open market analysis of daily chart
Yesterday the E-mini broke above Friday’s high, and therefore triggered a High 1 buy signal on the daily chart.
Friday was a bear day on the daily chart and therefore this was a weak buy setup. Emini streak of 6 consecutive bear days.
6 consecutive bear bars is rare, especially in a bull trend. Increased chance of bull body tomorrow.
However, also increased chance of big bear day. This is because the streak represents sustained profit taking, even though only small so far.
Additionally, it follows rare streak of 13 bull days in April, which might be a blow-off top.
Last week is sell signal bar on weekly chart. If today falls below last week’s low, it will trigger a weekly sell signal.
Bulls need consecutive closes above Thursday’s all-time high, which was the April high, to make traders believe that the bull trend is resuming.
Overnight E-mini Globex trading on 5-minute chart
Down 20 points in the Globex session so should have a big gap down. That will support the daily sell signal and probably the weekly sell signal as well.
Bears want this to be the start of a selloff for a few weeks.
Bulls want the sell signals to fail, and for the bull trend to resume.
After 6 consecutive bear days on the daily chart, there is an increased chance of today closing above the open. If the E-mini is within 10 points of the open in the final hour, it will probably get drawn to the open. Then, traders will decide if today will finally be a bull day.
Big gap down means E-mini will be far below the EMA, which is a measure of the average price.
Bears do not like to sell far below average. They want the E-mini to go sideways to up to the EMA. They then look for a double top or wedge top to sell.
A big gap down is bearish, but bulls expect the E-mini to test the EMA. They will look to buy a double bottom or wedge bottom for a reversal up to the EMA.
If there is a series of strong trend bars up or down, the day could form a Trend From The Open. That happens about 20% of the time. More likely, the E-mini will enter a trading range for the 1st 1 hour or two.
Yesterday’s E-mini 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. 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.