Pre-Open Market Analysis
Monday broke above a wedge top on the 60-minute chart. The target for the bulls is a measured move up, which is around 2860. However, the daily, weekly, and monthly charts have never been this overbought so a reversal down can come at any time. Yet, the bull trend is so strong that the 1st reversal down will be minor, even if it is 5 – 10 %.
Yesterday had an early reversal down on the 5-minute chart, but the day then was a trading range day. It was therefore weak follow-through buying day after Monday’s buy climax. Hence, it increases the chance of a selloff into the end of the week.
The bears want the week to be a reversal bar on the weekly chart. It would then be a doji bar with a big tail on the top. This would be the opposite of last week, which was a doji bar with a tail on the bottom. While not the start of a bear trend, the 2 weeks would represent a loss in the bull’s momentum.
Overnight Emini Globex Trading
The Emini is up 9 points in the Globex market. It therefore will probably gap up to another all-time high and above the 2-day bull flag on the 60-minute chart. Because a tight trading range is a magnet, the bull flag on the 60-minute chart might be a Final Bull Flag. Consequently, there is an increased chance of a reversal back down to the range today or tomorrow. The bears need to see consecutive strong bear bars before they will swing trade their shorts.
Because the higher time frames are in a blow-off top, there is an increased chance of an acceleration upwards. This means that today might be another trend from the open bull trend day. However, this is unlikely after a tight trading range on the 60-minute chart.
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.