By breaking below last week’s low, the Emini turned this week into an outside down week. The Emini reversed up yesterday from below last week’s low and last month’s low.
Because yesterday was a big bull bar closing on its high, it is a good buy signal bar for today. The bulls want a reversal up from the bottom of the 2 month range.
However, the rally on the 5 minute chart lacked the relentlessness that typically comes at major bottoms. The bulls therefore need several bull days before traders will believe that yesterday was the bottom.
Today is Friday and therefore weekly support and resistance are important. This is especially true at the end of the day today. The most significant weekly price is last week’s low.
The bears want this week to close below last week’s low. That would be a more bearish outside down week.
The bulls want a close above last week’s low. There is a small chance of a huge bull trend today with this week getting back above last week’s high.
Since yesterday’s was a strong buy setup on the daily chart, today will probably go above yesterday’s high. That will trigger the buy signal. But, traders will pay careful attention to what happens next. The daily chart is in a trading range for 2 months and therefore buy and sell signals are less reliable. There have been many surprisingly big moves up and down. This increases the chance of a surprise up or down today. One surprise might be that today does not go above yesterday’s high. Also, it could go above and then sell off.
After an overnight pullback in the Globex session, the Emini rallied to around yesterday’s high on this morning’s unemployment report. Today therefore might gap up. If the gap is small, it will probably close in the 1st hour.
Unless there is a strong early rally, today will probably be spend a lot of time around last year’s close, yesterday’s high, or last week’s low today. That means there is an increased chance of a trading range day today, despite yesterday’s strong rally.
Yesterday was a buy climax and therefore there is only a 25% chance of a big bull trend day today. This is true even with the strong buy signal bar on the daily chart. The day after a buy climax has a 75% chance of at least 2 hours of trading range trading that starts by the end of the 2nd hour. There is a 50% chance of some follow-through buying on the open.
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. 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.
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