Emini 60 Minute Head And Shoulders Bottom Despite China Trade War

I will update again at the end of the day.

Pre-Open market analysis

The Emini has been sideways for 2 weeks. But, it is forming another higher low. On the 60 minute chart, Monday was a higher low major trend reversal after Thursday’s lower low major trend reversal. Therefore, this is a 2 week long head and shoulders bottom in an oversold market.

Tuesday was a short day and an inside day. It is therefore both a buy and sell signal bar for today. Since its range was small, there is an increased chance that today will trade above its high and below its low. Either breakout can come 1st. This would create an outside day. Therefore, traders will look to sell a reversal down from above Tuesday’s high and buy a reversal up from below its low. But, since the week of the 4th of July is typically the 2nd quietest of the year, there is a smaller chance of a big trend day today.

Overnight Emini Globex trading

The Emini is up 21 points in the Globex session. It will therefore probably gap above Tuesday’s high, which would trigger a minor buy signal.

When there is a big gap, there is an increased chance of a trend day. The trend is more likely to be in the direction of the gap (here, up). However, a big gap up means that the 5 minute chart will be far above its 20 bar EMA. Most traders do not want to buy far above the average price. Consequently, the odds are that any rally on the open will likely stall within an hour or so. If so, the bulls will want the market to go sideways to down until it gets closer to the average price. Then, they will look to buy a reversal up.

If the bears can create 2 – 3 big bear bars on the open, day traders will look for a Trend From The Open bear trend day. They have a 20% chance of getting this. Since big gaps up usually lead to a trading range for the 1st hour or so, the bears will look for some type of a double top for an early high of the day.

Because most big gap up days usually become either bull trend days or trading range days, that is what is most likely today.

Yesterday’s setups

I did not trade earlier this week, so no setups chart posted.