The E-mini formed a 3rd consecutive bull trend day. While it is overbought, traders will keep buying until there is a clear top, or a strong reversal down. There is a measured move target above at 3807.50, based on a measuring gap on the 60 minute chart. That is a magnet above and today should get there.
Today is Friday and the end of a reasonably strong 1st week in 2021. Weekly support and resistance can be important, especially in the final hour. This week is an E-mini outside up week. Therefore this week’s open and last week’s high are important. The bulls want today to close above both, and they want the week to close on the high. That would increase the chance of higher prices next week.
For the bears, last year’s high and close are magnets below, as is the 3800 Big Round Number. Both are near the open of this week.
Overnight E-mini Globex trading
The E-mini is up 16 points in the Globex session. It will therefore open around the measured move target of 3807.50 on the 60 minute chart. That might lead to some profit-taking today, especially after 3 strong bull days. Also, the E-mini is breaking above the top of the bull channel that began with the Nov. 9 high. That is another resistance level. But until there is a clear top, traders will be more interested in buying.
Yesterday spent most of the day in a trading range. A trading range late in a bull trend is often the Final Bull Flag. Consequently, if there is an early rally today, there could be a reversal down. Day traders will look for a sell setup for a swing down.
Can today be a strong bull trend day? After a 3-day rally, that is unlikely. If today is a bull trend day, it will probably be a weaker bull trend, like a Trending Trading Range Day. Also, if there is a rally, there is an increased chance of a midday reversal down.
What about a big bear trend day? With the E-mini overbought and at the resistance of the measured move target, and the top of the daily channel, the bears could get a bear trend day today. If today starts to reverse, day traders will look for tests of the magnets below. The most important are the open of the week and last week’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. 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 Emini.