E-mini is in a strong bull trend, that may be getting too strong. Last week it closed on its high so it might gap up this week (today).
Having 11 consecutive bull bars is rare and therefore climactic; so is an 11-bar bull micro channel.
We've seen it run a 3-week parabolic wedge, so best to buy the climax. Extreme buy climaxes can last a long time, but usually they soon attract profit takers. Once profit taking begins, it is sometimes big and fast, like the Sept. 3, 2020 episode. We expect profit taking to occur soon, and there's an increased risk of big bear day this week.
11 consecutive bull bars and bull micro channel mean strong bulls. Bulls normally buy 1st 1- to 3-day pullback. But this buy climax is so extreme, that there is an increased risk of a 2-week selloff coming at any time. April might be putting in the high for the next several months, and possibly for the year.
There is no top yet so traders will keep buying, even though they know a sharp reversal can come at any time.
Overnight E-mini Globex trading on 5-minute chart
- Up 2 points in Globex session.
- Friday ended with a brief, sharp selloff after an extreme rally. Big Up, Big Down creates Big Confusion. Confusion is a hallmark of a trading range, so there's an increased chance of trading range open.
- After an extreme buy climax on the daily chart, and at the end of day on the 5-minute chart on Friday, there's a reduced chance of a big bull day.
- Also, there's an increased chance of big bear day at some point this week. If today is going to be a bear day, we'll probably will need to have a 1- to 2-hour trading range first, so that bears could create a major trend reversal.
- If there's a series of strong trend bars up or down in the 1st hour, then there's an increased chance of trend day. Early trading range likely, and big bull day unlikely.
- The day following an extreme buy climax day has a 75% chance of at least a couple of hours of sideways to down trading that starts by the end of the 2nd hour.
Friday’s E-mini setups
Disclaimer: Here are several reasonable stop entry setups from Friday. 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.
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.