Another day, another new high, and E-mini measured move 4,404 closer. Strong rally since since June 18, but yesterday reversed down from a new high.
Yesterday is a sell signal bar for a failed new high, but after 3 bull bars closing near their highs in a strong bull trend, the reversal down will probably be minor.
I said last week when the 11-day bull micro channel (which is a buy climax) ended that the E-mini might make a couple more new highs over the coming weeks, but that it will probably be mostly sideways. That would be similar to what followed the April buy climax. Yesterday could be the start of a 1- to 3-day leg down.
The bulls want at least one more new high and for the rally to reach the top of the channel, which is above 4,500.
If there is a reversal down from a new high, there would be a micro wedge top with the July 7 and July 13 highs, and it would be around the 4,400 Big Round Number and the 4,404 measured move target.
The bears would probably make another attempt at a correction.
Remember, after 5 consecutive bull bars on the monthly chart, July will probably close below the open of the month.
Also, after the climactic streak of 11 days in a micro channel, the E-mini will probably not go a lot higher without a couple weeks of sideways to down trading first.
Even though E-mini is overbought, traders will buy even a 20% selloff.
Only a single pullback day in a month so should have more pullback days within a few days, and maybe today.
15 – 20% selloff can begin at any time and before reaching resistance, but traders have been buying every 1- to 3-day reversal down, correctly expecting higher prices. No reason yet to believe that this is about to change.
E-mini 5-minute chart and what to expect today
E-mini is up 15+ points in the overnight Globex session.
Bears want today to trade below yesterday’s low to trigger minor sell signal on daily chart.
Bulls want at least one more new high.
Yesterday was a Spike and Channel Bear Trend. That typically evolves into a trading range.
Bear channel is bull flag so should get at least a couple legs sideways to up today.
Increased chance of trading range trading starting by end of second hour today.
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.