Yesterday the E-mini gapped down to below the open of the month, but rallied and closed near its high. E-mini likely in developing trading range.
There are 5 bull bars on the monthly chart and July will probably not be the sixth. Therefore, even if the E-mini continues to rally, it will probably end the month below the open of the month.
Yesterday is a High 1 buy signal bar for today, and the bull trend has been strong. But, the big tail on top makes it a weak buy signal bar.
I have been saying for the past week that the E-mini will probably be mostly sideways for a week or more after extreme buy climaxes on the daily and 60-minute chart. Therefore, traders should expect reversals every few days.
Today will probably open back above the 60-minute EMA. The E-mini might have to oscillate around it for several day after being above it for 70 bars, which is an extreme buy climax.
Since a trading range is likely on the 60-minute and daily charts, traders should also expect disappointment. That reduces the chance that tomorrow will be a strong entry bar for the bulls.
When the daily chart is in a trading range, the 5-minute chart tends to spend more time in trading ranges. There should be at least one swing up and one swing down today and either can come first.
Everybody knows that the market has rallied for a long time without more than a 10% pullback. That is unusual. There should be a 15 – 20% pullback before the end of the year.
Mid-July through mid-October is a common time for corrections. Did it begin yesterday? In a bull trend, the odds are that every bear day will be followed by a new high. The bears need several strong bear days before traders will conclude that the 15% correction has begun.
E-mini 5-minute chart and what to expect today
E-mini is up 21 points in the overnight Globex session.
It will probably open back above the 60-minute EMA.
The streak of 70 consecutive bars above the EMA on the 60-minute charts was one of the most extreme buy climaxes on that chart in years. That increases the chance that the E-mini will have to oscillate around it for several days.
While yesterday is a buy signal bar on the daily chart, it had a big tail on top. That reduces the chance of a big bull trend day.
Yesterday’s rally was strong enough to make a big bear day unlikely.
Today will probably have at least one reversal and not be a big trend day.
Since today is Friday, weekly support and resistance can be important, especially in the final hour.
The bulls want the week to close above the open of the week. That would increase the chance of higher prices next week.
It is more likely that the week will close in middle third and have a bear body. That would increase the chance of more sideways trading next week.
While unlikely, the week will close near the low. That would increase the chance of lower prices next week.
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.