Pre-Open market analysis
After Thursday’s big rally, Friday was a big bear trend day. It is a sell signal bar for today, but it is at the bottom of a 7 week trading range. The bears have momentum, but the bulls have support. This is a Breakout Mode situation.
Also, last week was an outside down week that closed near its low. It is therefore a sell signal bar on the weekly chart. However, when there is a big outside down bar, there is an increased chance that the next bar will be an inside bar. This is especially true because of the 7 week tight trading range. Therefore, the bulls will look for a possible rally up from above last week’s low. The bears instead want a BO below.
Friday was in a bear channel on the 5 minute chart. A bear channel is a bull flag. Consequently, the odds favor a bull breakout. A channel typically evolves into a trading range. That increases the chance of trading range trading today. This is particularly true since Friday spent a lot of time going sideways, even though it was in a bear channel.
Overnight Emini Globex trading
The Emini is up 7 points in the Globex session. It will therefore open around Friday’s low and last week’s low. The bulls will try to create an early low of the day and low of the week from around last week’s low. There is therefore an increased chance of a bull trend day, or at least a trading range day with an early low.
While the bears want a big bear day, it is unlikely after a sell climax day at the bottom of a 7 week trading range. However, the biggest trend days come when they are least likely. Consequently, if there is a strong break below last week’s low and the Emini stays below the EMA, traders will sell all day.
Most likely, today will reverse up from around last week’s low and test Friday’s bear breakout point around 2665. That is the top of Friday’s double top bear flag.
Friday’s setups
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. I rarely also show limit order entries and entries on the close of bars. 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.