Pre-Open market analysis
Yesterday was a strong bull trend day. Furthermore, the Emini finally broke above the March 13 major lower high, which I said was likely. However, it only closed only 1 tick above. The bulls need follow-through buying over the next several days to make traders believe that the breakout will be successful. In addition, they need to get 20 or more points above the high.
The bears will try to make the breakout fail. They need to get a strong reversal down for several days before the bulls will give up.
Since the Emini is still in the 6 month trading range, the odds are that the bulls will be disappointed over the next couple of weeks. Instead of a series of big bull bars, a tight trading range is more likely. For example, the Emini might oscillate around the March high for 2 – 3 weeks. Then, it would decide between trend resumption up to a new all-time high or trend reversal down.
Because yesterday was a buy climax, there is a 75% chance of at least a couple hours of sideways to down trading today that begins by the end of the 2nd hour. Although there is a 50% chance of follow-through buying on the open, there is only a 25% chance of another strong bull day.
Overnight Emini Globex trading
The Emini is down 2 points in the Globex session. If the day session opens here, it will continue yesterday’s 4 hour trading range. As strong as yesterday’s rally was, it stalled at major resistance.
While the odds favor a new all-time high before a break below the February low, trading ranges resist converting into trends. Therefore, the odds are that any strong rally or selloff will reverse rather than successfully breakout. That is true with the current rally as well. Therefore, the bears will sell any strong rally over the next week. They will try to create a sell signal bar on the daily chart, and then begin a reversal down. This means there is an increased risk of a series of bear days beginning within a couple of weeks.
Since yesterday was a buy climax, the odds are against a strong bull trend day today. More likely, yesterday’s 6 point trading range will continue. However, it will likely expand by a at least a measured move up or down today.
Yesterday’s setups
Here are several reasonable stop entry setups from yesterday. I sometimes also show limit order entries and entries on the close of bars. 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 in a position at the moment, these entries would be logical times for him to enter.