The E-mini broke to a new all-time high yesterday, but failed to close at a new high. The break above the Feb. 24 lower high erased the bearishness of last week’s 3 consecutive bear bars. The bears gave up, at least for the moment.
When one side gives up, there is usually at least a small 2nd leg up. Consequently, traders will likely buy the 1st 1- to 3-day pullback. Therefore, there is not much downside risk over the next few days.
The bears want the breakout to fail. With yesterday’s tail on top, and with the 6-day micro channel, there is an increased chance that today will trade below yesterday’s low. A reversal down would be from a higher high double top. But since traders will buy the 1st reversal down, the bears will need at least a micro double top before they can get more than a minor reversal.
The next target above is the 4,000 Big Round Number. Will the E-mini break above it? I have been saying for months that it should, but the odds favored a pullback first. Now, the odds favor at least a test of 4,000 within about a week.
Overnight Emini Globex trading
The E-mini is down over 10 points in the Globex session. While yesterday broke to a new high, the size of midday reversal down was disappointing for the bulls. Big Up, Big Down creates Big Confusion. When traders are uncertain, they tend to buy low, sell high, and take quick profits. There is therefore an increased chance of a trading range day today.
Also, with yesterday’s weak close and a 6-day bull micro channel on the daily chart, the bears will try to get today to break below yesterday’s low. That would trigger a double top (with the February 16 high) sell signal. However, there probably will be more buyers than sellers below yesterday’s low.
With today being Friday, weekly support and resistance can be important, especially in the last hour. The most important magnets below are the February 24 high and the last week’s high. Also, the 3,900 Big round Number is a magnet. For the bulls, they want the week to close above the Feb. 16 high and the 3,950 Big Round Number.
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. 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.