Yesterday was a big bull inside day after a big bear outside day on the daily chart. There is now an IOI (inside-outside-inside) pattern, which is a Breakout Mode setup. Yesterday is now both a buy and sell signal bar.
Today will probably gap up and trigger the buy signal. Furthermore, the E-mini is currently trading above the Sept. 16 high, which is the top of the month-long trading range.
In general, a breakout has a 50% chance of failing. However, this is important resistance. The overnight breakout will probably lead to at least a couple days of sideways to up trading before traders decide if the breakout will fail.
The bulls want the 2 week rally to continue up to a new high this month. If they get consecutive closes above the September 16 lower high, the Emini will probably continue up to the September 3 all-time high. At that point, the bulls will want a strong breakout to a new high. But the bears will try to create a reversal down from a double top.
At the moment, the odds still are favor a lower high and a 2nd leg sideways to down on the daily chart. But that could chance in the next few days.
Overnight E-mini Globex Trading
The E-mini is up 20 points in the Globex session. If it opens here, it will gap above the September 10 high. That is the top of a month-long trading range.
The bears want the breakout to fail and for the E-mini to reverse down strongly on the open. But I have been saying that the rally might continue up to 3500 before the bears will sell aggressively again.
Since the bears were unable to get follow-through selling after their big bear day on Tuesday, the odds are that the Emini will get some follow-through buying over the next few days.
If there is a trend today, up is slightly more likely. Because the E-mini is at major resistance, there is an increased chance of a big breakout above that resistance. That means the bulls have an increased chance of a big bull trend.
Trend days usually being in the 1st hour or two. There is a 20% chance of a strong trend up or down that begins within the first few bars. Otherwise, traders will look for early sideways trading. The bulls will try to reverse up from a wedge bottom or double bottom near the EMA. However, the bears will look for a wedge rally or a double top and then a bear trend.
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. I rarely also show limit order entries and entries on the close of bars. I do not want the lines to be distracting. If they are longer, I make them dotted. But, they have to be visible, so I make the shorter ones solid. 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.