Yesterday, the E-mini made a new all-time high, but became an outside down day, which is bearish, that closed near its low. It is a double top sell signal bar for today for a higher high major trend reversal.
Last week’s range was small. This week might become an outside down bar on the weekly chart. If the month closes below the open of the month, there will be a bear bar on the monthly chart. That would increase the chance of lower prices in December.
However, the daily chart has been in a Small Pullback Bull Trend since the Oct. 13 low. There have been many reversal attempts and all were minor. This reduces the chance that the reversal will be major. If today is a bull inside day, it will be a buy signal bar for tomorrow. On the other hand, if today is another bear bar closing near its low, it would increase the chance that the selloff will continue down to the open of the month by the time the month closes next week.
If today is not a strong bull day, the selloff should continue down to the Nov. 10 low, even if there is a bounce first. The bulls will try to get a reversal up from a double bottom bull flag with that low. More likely, the E-mini will trade sideways to down for at least a couple weeks.
Today is a good candidate for the high of the year. But the bears will need several big bear bars before traders will believe that this selloff will grow into a bear trend.
A market often pulls back just before a candlestick closes. On the yearly chart (not shown), the E-mini might pull back into the end of the year, which would put a conspicuous tail on top of the bar. That would make this year’s bar less bullish.
E-mini 5-minute chart and what to expect today
E-mini is up 1 point in the overnight Globex session on the daily chart. Yesterday there were 2 strong selloffs and E-mini closed near the low. It was a sell climax day.
The bears want a gap down today and then a strong bear trend. If there are early bear bars closing near their lows, whether or not there is a gap down, there will be an increased chance of a bear trend day today. However, when there is a sell climax into the close, there is a 75% chance of at least a couple of hours of sideways to up trading that starts by the end of the second hour. That reduces the chance of a Bear Trend From The Open today.
Bulls want a reversal up. But the selloff was a Major Bear Surprise. It will probably affect the next several days. Traders will look to sell the first strong rally, even if it lasts for a couple days. There is at least a 50% chance that the E-mini will work down to the Nov. 10 low. That said, a strong bull trend day today would erase much of yesterday’s bearishness. Today would then be a High 1 buy signal bar for tomorrow.
Yesterday’s E-mini 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. These therefore are swing entries.
It is important to understand that most swing setups do not lead to swing trades. As soon as traders are disappointed, many exit. Those who exit prefer to get out with a small profit (scalp), but often have to exit with a small loss.
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 E-mini.