Pre-Open market analysis
Last week formed a good buy signal bar on the weekly chart for a High 2 bull flag at the 20 week EMA. The odds are that this week will trade above it, and possibly gap above it, last week’s high and trigger the weekly buy signal. The rally will probably last at least 1 – 2 weeks and it might also continue up to a new high.
There is always a bear case. February formed a wedge lower high on the daily chart. The bears therefore want the 6 day rally to form a double top with that high. They then want a break below the neck line, which is the low of 2 weeks ago. Finally, they want the selloff to test the February low. At the moment, they have only a 30% chance of a test of the February low.
Overnight Emini Globex trading
After rallying above 2800 overnight, the Globex market pulled back. It is still up 5 points. The day session will therefore open around Friday’s high instead of gapping far above it. This is disappointing for the bulls. Because Friday was a buy vacuum test of the February 27 lower high, there is an increased chance of a reverse down today. This would increase the odds of a double top on the daily chart.
Friday was a buy climax day. There is therefore only a 25% chance of another strong bull day today. The overnight pullback is consistent with that. In addition, there is a 75% chance of at least a couple hours of sideways to down trading beginning by the end of the 2nd hour. However, there is a 50% chance of some follow-through buying in the 1st 2 hours.
Friday’s high, 2800, and Friday’s late 2 hour tight trading range are magnets. Hence, the Emini might spend a lot of time between 2780 and 2800 today.
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.