Pre-Open market analysis
The Emini broke to a new all-time high yesterday, but this followed 9 consecutive bull bars. That made it likely that yesterday would close below the open and finally form a bear bar on the daily chart, which it did.
Yesterday closed near its low. It is an outside down bar and sell signal bar for today for a double top with the February high. But because it closed above Monday’s low, the bears were not as strong as they could have been. That reduces the chance of a big bear breakout today.
Since 9 bull bars is a sign of persistent bulls, they will probably buy the 1st 1 – 3 day pullback. However, it is a buy climax. After 8 bull days in June, the Emini sold off 9%. After 9 bull days in January 2018, there were a couple brief legs up and then a 10% pullback.
Traders should expect a 10% pullback to begin sometime in August. They will then see this 5 month rally as forming a double top with the February high.
If yesterday is the start of the pullback, the bears will need follow-through selling today. It is more likely they will not get it. There have been many 1-day selloffs in the past 2 months. None has had follow-through.
That is why I have been referring to the 2 month rally as a Small Pullback Bull Trend. The bears will likely need at least a micro double top before a test down to 3,000 begins.
Since the 5 month rally has been strong, even a 10% selloff will probably be minor. There will probably then be at least one more test of the February high after the 1st selloff.
Overnight Emini Globex trading
The Emini is up 26 points in the Globex session. It will therefore open in the middle of yesterday’s range. The day after a big outside down day often is an inside day. A strong rally frequently reverses down from just below yesterday’s high and traders look for a reversal up from just above yesterday’s low.
An outside day is a sideways day. There now are 4 sideways day. Therefore, even if today breaks out of yesterday’s range, the breakout will probably be small. Traders expect a trading range day today. However, the selloff was big enough so that there will probably be a 2nd leg down this week before the bulls will be able to get much above yesterday’s high.
Yesterday’s 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. I rarely also show limit order entries and entries on the close of bars. I do not want the lines to be distracting. If they are longer, I make them dotted. But, they have to be visible, so I make the shorter ones solid. Buyers of 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.
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 Emini.