Pre-Open Market Analysis
The Emini sold off yesterday. Traders are deciding if this is the start of a 2 – 3 week pullback. Because the daily chart has a parabolic wedge top, the odds favor a couple small legs down over the next few weeks. The targets are the bottoms of the pullbacks in the wedge bull channel. That is around 2950 or 2900.
Since Monday’s candlestick had a tail below, it is a low probability sell signal bar. There might be more buyers than sellers below its low. The bears will need 2 – 3 consecutive bear days to convince traders that the pullback has begun.
Monday’s high was exactly at the open. It was therefore never tested. That makes it a magnet above. Many traders want to see at least a small break above Monday’s high and then a reversal down before looking to sell. However, if the bears get a couple big bear days without that test, traders will conclude that the pullback has begun.
Overnight Emini Globex Trading
The Emini is up 1 point in the Globex session. Yesterday ended with a 4-hour trading range. Today will probably open within that range. If the bulls can hold above yesterday’s low, they will have a double bottom pullback. That is a buy setup and it often leads to a bull trend.
The bears want a break below yesterday’s double bottom. They then want a measured move down to below the 3,000 Big Round Number. They hope that the month-long parabolic wedge bull channel is finally reversing.
While it will likely begin to reverse down within the next 2 weeks, the bears need strong follow-through selling after yesterday’s bear day. If the Emini begins to fall, more traders will conclude that the 2 – 3 week pullback has begun. The bulls will begin to take profits and the bears will sell. There is therefore an increased chance of a bear trend day today.
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. I rarely also show limit order entries and entries on the close of bars. Buyers of the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day.
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.