E-mini Pre-Open Market Analysis
Daily Chart
Yesterday, E-mini gapped down but reversed back up to above Friday’s high, forming an outside up day and a new all-time high, then breaking above the bull channel top. Usually, the day after an outside up day often has a lot of overlap with that day; sometimes making it an inside day, while it is usually not a second consecutive big bull day, even in a strong bull trend.
In addition, we saw the E-mini break slightly above the top of the 4-month bull channel on the daily chart yesterday, closing above the channel, which is what bulls want. That way, it would increase the chance of at least several more days of higher prices. However, as strong as the bull trend is, there is a 75% chance of the start of a reversal back down to the middle of the channel by the fifth day above the channel. Consequently, it will probably not go much higher before there is at least a 2- to 3-day pullback.
The next magnet above is the 4500 Big Round Number. The rally might have to reach it before traders will look to take profits.
The bears want a couple of bear days closing below the top of the channel. That would increase the chance of a reversal down to at least the middle of the channel, especially if the bear days are big and close near their lows. Bears are hoping for a reversal down into the end of the month so that August will close below the open of the month.
If August has a bear body on the monthly chart, traders will expect 2 to 3 months of sideways to down trading. It would make August a sell signal bar for a minor reversal down from a parabolic wedge buy climax.
E-mini 5-Minute Chart And What To Expect Today
E-mini was down 22 points in the overnight Globex session. It will probably open in the middle of yesterday’s range, which increases the chance that today will mostly overlap with yesterday’s range. It also increases the chance that today will be an inside bar. There will probably be a reversal up from around yesterday’s low or down from around yesterday’s high.
Yesterday was a buy climax day, and the day after a buy climax day has a 50% chance of follow-through buying in the first hour or so, but only a 25% chance of being a second consecutive big bull day.
Also, there is a 75% chance of at least a couple hours of sideways to down trading that starts by the end of the second hour. With today's likely opening in the middle of yesterday’s range, the trading range might begin on the open.
Yesterday’s E-Mini 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. These therefore are swing entries. It is important to understand that most swing setups do not lead to swing trades. As soon as traders are disappointed, many exit. Those who exit prefer to get out with a small profit (scalp), but often have to exit with a small loss. 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.