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E-Mini: Big Bull Bar On Monthly Chart, And Only 2 Days Left To Go In August

By Al BrooksStock MarketsAug 30, 2021 09:42AM ET
www.investing.com/analysis/emini-big-bull-bar-on-monthly-chart-and-only-2-days-left-to-go-in-august-200600400
E-Mini: Big Bull Bar On Monthly Chart, And Only 2 Days Left To Go In August
By Al Brooks   |  Aug 30, 2021 09:42AM ET
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E-mini daily chart

Friday saw E-mini make another new all-time high, with a big bull bar on monthly chart. After closing last week near its high, this week could gap up today, creating a gap on the weekly chart.

Friday was also a buy climax day. The day after a buy climax day has a 75% chance of at least a couple hours of sideways to down trading that begins by the end of the second hour.

With only two trading days left in August, the E-mini is far above the open of the month. August will probably have a bull body and be the seventh consecutive bull bar on the monthly chart. There has never been a streak of 8 consecutive bull bars on the monthly chart in the 25-year history of the E-mini. Therefore, September will probably have a bear body and if it does, that should lead to a 2- to 3-month correction of 15 to 20%.

Bars often change their appearance just before they close. August is a bull bar that is currently trading at the high with 2 days left in the month. That means there is an increased risk of a 50-point selloff over the next two days. It would take about 50 points of selling to add a noticeable tail on the top of the monthly candlestick.

Alternatively, the bulls would be happy having the month close near the high. That would increase the chance of a gap up on the monthly chart on Wednesday. There is no great need for a rally over the next couple days. The bulls will have accomplished a lot if they can simply keep the E-mini near its high through the end of the month tomorrow.

Though there have been many reversal attempts on the daily chart over the past year and a half, traders bought every one, correctly betting against a successful reversal. They will continue to bet on higher prices until there is a very strong reversal down. Once they see a reversal down that is strong enough to make them think a correction is underway, the correction will be half over.

E-mini 5-minute chart and what to expect today

E-mini was up 6 points in the overnight Globex session. It will likely gap up, which would create a gap on the weekly chart as well as the daily chart.  If it does and the gap is small, it will probably close in the first hour.

Friday was a buy climax day, so there is a 75% chance of at least a couple hours of sideways to down trading that starts by the end of the 2nd hour today. We also saw a trading range formed during the second half of the day, which increases the chance of an early trading range today.

With the E-mini overbought and at the high of the month at the end of the month, there is a reduced chance of a big bull day.

The bears want a 50-point selloff before tomorrow’s close. Most likely, the E-mini will be mostly sideways around the high of the month today and tomorrow.

Friday's E-mini setups

E-mini Chart
E-mini Chart

Here are several reasonable stop entry setups from Friday. 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. These therefore are swing entries. It is important to understand that most swing setups do not lead to swing trades. As soon as traders are disappointed, many exit. Those who exit prefer to get out with a small profit (scalp), but often have to exit with a small loss. 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.

E-Mini: Big Bull Bar On Monthly Chart, And Only 2 Days Left To Go In August
 

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E-Mini: Big Bull Bar On Monthly Chart, And Only 2 Days Left To Go In August

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