Pre-Open market analysis
The Emini has had 3 consecutive mostly trading range days. The bears want the 4 day rally to form a lower high and then break below last week’s low. However, the bulls want a new all-time high. Because of the extreme buy climax on the weekly chart, the odds are against much higher prices before there is a pullback to the weekly moving average.
While yesterday is a sell signal bar on the daily chart for a lower high major trend reversal, the reversal up was strong. Therefore, most bears will want at least a micro double top before selling for a swing down. Consequently, the downside risk over the next few days is small.
Overnight Emini Globex trading
The Emini is down 5 points in the Globex market. The 4 day rally is in the top half of the month-long trading range. In addition, last weeks’s selloff was strong enough so that traders will sell this rally, look for at least a test of last week’s low. The past 2 days have bear bodies. This represents selling. Yet, the 4 day rally was strong. Hence, there is a Big Down, Big Up pattern on the daily chart. This therefore creates Big Confusion, which is a hallmark of a trading range. Consequently, the odds favor at least another day or two of sideways trading. The bears will probably need a micro double top before they can begin their test down. The bulls need a strong breakout, which currently is less likely.
The past 3 days have been trading range days. Since the probability favors the bears over the next week or two and they need a micro double top, today will probably be another trading range day.
Yesterday’s setups
Here are several reasonable stop entry setups from yesterday. I sometimes also show limit order entries and entries on the close of bars.