Pre-Open market analysis
By falling below Thursday’s low, the daily chart on Friday triggered a sell signal. Yet, the signal bar had a big tail and was therefore week. In addition, Friday was not a big bear trend day. Hence, it was a weak entry bar for the bears. In addition, because it was a small bull day, Friday is a buy signal bar. Yet, after 4 doji days at the top of a buy climax, the odds are against the Emini from going much higher without pulling back for at least several weeks.
Last week was a small bear bar on the weekly chart. It is therefore a sell signal for this week. Yet, because the weekly chart is in a tight bull channel, any reversal down will probably be minor.
Since the weekly and monthly charts have extreme buy climaxes, the odds are that the Emini will fall 100 – 200 points over the next 2 months. Yet, because most reversal fail, the odds are against a move below last week’s low being the start of the correction. Because the buy climaxes are extreme, the up side is small. Therefore the Emini will probably be mostly sideways to down for a couple of months.
Overnight Emini Globex trading
The Emini is down 2 points in the Globex market. Since the past 5 days have been trading range days in a tight trading range, that is likely again today. This is true even though Friday is a buy signal bar on the daily chart and last week is a sell signal bar on the weekly chart.
Because last week is a sell signal bar on the weekly chart, last week’s 2494.00 low is a magnet this week. Since that is only 2 points below the Globex low, the odds are that the bears will break below it today or tomorrow.
However, last week was also a doji bar. It is therefore a weak sell signal bar. Yet, the weekly and monthly charts are so extremely overbought, there is an increased risk of a 100 – 200 point correction beginning soon. Therefore, despite the weak sell signal bar on the weekly chart and the 8 doji bars on the daily chart, there is an increased chance of a big bear today this week.
While traders will be mostly looking for scalps because of the 5 day tight trading range, the will switch to swing trading if the Emini begins to trend down below last week’s low. Less likely, it will break above Friday’s high. If it rallies strongly, they will buy for a swing up, even though the Emini would become even more overbought.
Friday’s setups
Here are several reasonable stop entry setups from Friday. I sometimes also show limit order entries and entries on the close of bars.