Although yesterday the E-mini made another new high and it was the sixth consecutive day without a pullback, it was the third consecutive bear bar ahead of today’s unemployment report.
There should be a pullback either today or early next week.
Yesterday is a sell signal ahead of Labor Day holiday at top of the bull channel on daily chart and at the 4,537.00 measured move target (based on the height of the pandemic crash). It is a doji bar in a strong trend so probably buyers not far below.
The bull trend has been very strong, and therefore traders expect all resistance to fail. Traders will continue to buy every 1- to 3-day pullback until one is so big that traders will conclude that a correction is underway.
This weekend is a 3-day holiday weekend. There is often some euphoria ahead of holidays, and the market tends to rally through Sept. 5. There is therefore a slightly increased chance of a bull trend day or a rally at the end of the day.
Today’s unemployment report and the 3-day weekend are catalysts that create uncertainty and could lead to a strong trend day in either direction.
However, after 4 days with a lot of trading range trading, traders will expect more today unless there is a Trend From The Open.
E-mini 5-minute chart and what to expect today
E-mini is up 3 points in the overnight Globex session, after a 20-point swing after unemployment report. The market is currently moving fast. There have been several big reversals. That increases the chance of an early trading range.
The big range increases the chance of at least one swing trade today. It also increases the chance of a big trend day. It can be in either direction.
So far, the E-mini rallied, sold off, and bounced to retrace 50% of the selloff.
Traders see the bounce as a pullback from the selloff from the Globex high. That makes sideways to down trading likely. The size of the selloff is enough to so that traders expect today will not get above the Globex high.
As I said above, the E-mini is in a strong bull trend, but overbought and it is starting to form bear bars on the daily chart. That increases the chance of a pullback for 1 to 3 days. Today could be the start.
I have been saying that September will probably be the high for the year. Is this the start? There have been many other attempts to get a trend reversal on the daily chart and each failed. It is a low probability bet to say that this is the final high.
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.