Pre-Open Market Analysis
On Monday, the Emini reversed up from the bottom of the bull channel on the daily chart and from the September 7 low. It was a good buy signal bar at this support. Yesterday triggered the buy signal on the daily chart by going above Monday’s high. However, since it was only a doji bar, it was a weak entry bar.
Yesterday is also a Low 1 bear flag sell signal bar. But, it has a bull body and it followed a strong buy signal bar. This makes it likely that there will be more buyers than sellers below yesterday’s low.
Yet, the 3 day selloff was strong. Therefore, any rally this week will probably form a lower high. Although the daily chart is still in a bull trend, it is now in a bear leg. Since the weekly chart is overbought and the 20 week EMA is not far below, a rally on the daily chart will probably form a lower high. The odds favor a test of the 20-week EMA. Furthermore, there is other support at the June high and August low at around 2800.
Consequently, that is a reasonable target for the bears over the next few weeks.
The 5 minute chart reversed up yesterday from a 3-day wedge bottom. It therefore might rally more today. But, the rally will probably be limited to a few days. The Emini is probably working its way down to 2800.
The importance On Weekly Chart
Yesterday formed a triangle on the 5-minute chart after 3 days will big swings. Today will probably again be mostly sideways. The Emini might wait until the end of Friday to decide on how bearish this week will be.
The bears want a big bear trend bar on the weekly chart. That is unlikely at this point. At a minimum, they want the week to have a bear body and close near the low of the week. That would be below the January high and the September 7 low. It would therefore increase the chance of a move down to 2800.
The bulls always want the opposite. However, since the 20 week EMA is a magnet just below, the Emini will probably get there over the next few weeks by going sideways to down. Consequently, even if this week closes on its high, the upside is probably limited next week.
Overnight Emini
The Emini is down 10 points in the Globex market. It therefore might gap below yesterday’s low. While that would trigger a Low 1 sell signal on the daily chart, the consecutive bull days at support make it likely that the Emini will rally up from below yesterday’s low.
The 3 days of strong selling transitioned yesterday into a trading range. The sideways trading will probably continue for the rest of the week.
But, since this selloff will probably continue down to 2800 over the next few weeks, big bear trend days are more likely to occur. That means that day traders always need to be ready for relentless selling, even when after consecutive bull days at support.
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. 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.