The Emini broke above Friday’s high yesterday and therefore triggered a High 2 buy signal on the daily chart. Since yesterday was not a big bull trend bar, it was not a strong entry bar. However, the High 2 had 2 strong reversals up over the past week. The odds favor a weak rally this week to last Wednesday’s high.
The monthly chart is in a strong bull trend. Consequently, the odds are against much more down on the daily chart. Most likely, it will go sideways for 1 – 3 months. Then, the bulls will try to form a major trend reversal.
Less likely, the bears will break strongly below last week’s low and get a 20% correction. Even if they succeed, the selloff will still favor a bull flag on the monthly chart.
Overnight Emini Globex Trading
The Emini is down 10 points in the Globex session. The odds are that it will retrace about half of the February selloff before try to break below last week’s low. However, the rally will likely form a lower high. The odds are that it will be a bull leg in a 1 – 3 trading range. Consequently, it will probably be weak.
This means that it will probably lack consecutive big bull bars. Moreover, it will have pullbacks. For example, although yesterday was an entry bar for the bulls, it is a Low 1 sell signal bar for the bears. Given how strong the selloff has been, today could trigger the sell signal by trading below yesterday’s low. Yet, the odds are that Friday was a short-term bottom. Therefore, there probably are more buyers than sellers below yesterday’s low.
Traders should expect that the rally over the next week or two will have pullbacks. These attempts to resume the bear trend will probably fail. The probability is that the Emini will work higher for a couple of weeks. Therefore, when there is a 2 – 3 hour selloff, day traders will look to buy a reversal up.
The bears expect selloffs. They therefore will look to sell any 2 – 3 hour rally for a leg down. There will probably be one or more bull and bear trend days in the next 2 weeks as well. Yet, the Emini is most likely in a 2 week bull leg in 1 – 3 month trading range.
Here are several reasonable stop entry setups from yesterday. I sometimes also show limit order entries and entries on the close of bars.
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