As I said before yesterday’s open, yesterday was likely to form an early low of the day. The day closed on its high and it is a buy signal bar for a head and shoulders bottom on the daily and 60 minute charts. That is also a higher low major trend reversal buy setup.
The bulls want today to go above yesterday’s high. That would trigger the buy signal. Since the bears always want the opposite, they will try to form an inside day today.
Last week was a sell signal bar on the weekly chart. Since last week’s candle had a bull body, it was a weak sell signal bar. I said last weekend that the sell signal would trigger, but there would probably be buyers below. Furthermore, I have been saying for several weeks that the Emini would test the October 17 lower high, selloff to around last year’s close, and try to reverse up from a higher low major trend reversal. So far, everything is following the likely path.
But, yesterday is the 7th bar in a bear micro channel. That increases the chance that the 1st reversal up will stall within 2 – 3 days. Even if it does, the odds still favor another test of the October 17 lower high. In addition, a break above that high is more likely than a break below the February low.
Today is Friday and last week’s 2717.00 low is the most important price. The bulls want today to close above that low. Closing above the low of a weekly sell signal bar is a sign of weak bears and strong bulls. The overall chart favors the bulls and therefore a close above last week’s low.
Overnight Emini Globex trading
The Emini is down 24 points in the Globex market. The day session yesterday was in a bull channel, which is always a bear flag. Today’s open will probably break below yesterday’s bull trend line.
This will create a big gap down and an open in the middle of yesterday’s range. Because yesterday had a big range and today is opening in its middle, there is an increased chance of an inside day. When that is the case, day traders will look for reversals. They will sell rallies to around yesterday’s high and buy selloffs to near yesterday’s low. This typically results in a trading range.
Today will open near last week’s low. If there is a trading range today, the Emini might oscillate around 2717 all day. In addition, if the Emini is within 10 points of last week’s low in the final 2 hours, it will probably get drawn to it to test it one last time.
60 minute chart head and shoulders bottom
Although yesterday was a strong bull trend day, the 60 minute chart has been in a tight bear channel for 7 days. The 1st reversal up is usually minor. That means that the bulls will probably need a test down before they can create a sustained rally.
Today’s gap down on the 5 minute chart will give the bulls the opportunity to form a higher low. That would increase their chance of a successful reversal up from the month-long head and shoulders bottom on the 60 minute chart (also present on the daily chart).
Yesterday’s setups
