The E-mini gapped up on the monthly chart yesterday. A gap up to a new all-time high on the monthly chart is rare. I don’t know if it has ever happened before in the history of the E-mini or the S&P 500 futures market. That makes it more emotional, which increases the chance of either a strong leg up from here or of a reversal down.
It is important to note that while the gap was big on the daily chart, it was small on the monthly chart. Small gaps typically close before the end of the bar, which means before the end of the month.
When there is a big gap up above major resistance, like on the daily chart, the E-mini often goes sideways for a few days before traders decide if the bull trend will continue or reverse. With yesterday having a a close near the open, there is indecision. That increases the chance of more sideways trading again today. However, because the E-mini is overbought and gapping up, there is an increased chance of a series of trend days in either direction.
Overnight E-mini Globex trading
The E-mini is down 11 points in the Globex session. That is just above the November high. Remember, the gap on the monthly chart was small, and it will therefore probably close before the end of the month. That does not mean that December will reverse down. It only means that it might test below the November high. It could then continue sideways or resume up.
While yesterday is a sell signal bar for today, it is a weak doji bar in a bull trend. That reduces the chance of a big bear trend day. But it had a small bull body, and that reduces the chance of a big bull trend day.
The past 4 days each reversed. Most days over the past month have had at least one swing up and one swing down. Day traders will expect that again today.
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 Emini.