Pre-Open Market Analysis
Yesterday was an outside up day and then an outside down day. The Emini is stalling around the February 7 major lower high. The bulls want a strong breakout above and then a new all-time high. The bears want a double top bear flag and a measured move down below the February low. Since Big Up, Big Down creates Big Confusion, a continued trading range is likely.
This means that both bulls and bears will continued to be disappointed by their inability to create a trend. Last week’s momentum favors the bulls. But, the rally is stalling at resistance, which is at a 50% pullback and the February 7 high. The bulls have a slight advantage after a strong rally on the daily chart and 2 strong reversals up. However, unless they can break strongly above this resistance, the odds favor a continued trading range that could last a month or more.
The bulls will probably trigger the buy signal on the weekly chart this week. They need to get above last week’s high. Anything good for the bulls is bad for the bears. Consequently, the bears will try to prevent this. They will be happy if this week remains an inside week. They then would try for a bear breakout next week below the 2 week ii (consecutive inside weeks).
The odds favor at least a little higher over the next week, but then a pullback on the daily chart. Then, the bulls will probably get at least one more leg up. The bears will try to make that leg fail, which would create a wedge lower high on the daily chart.
Overnight Emini Globex Trading
The Emini is up 2 points in the Globex session. Since yesterday fell below Friday’s low, it was the 1st pullback in a 6-day bull micro channel on the daily chart. The 1st pullback usually only lasts 1 – 3 days. Consequently, the bulls will probably get at least a 1 – 2 day rally starting this week. However, this 2-day selloff might get closer to the February 14 low 1st. That was the start of the final buy climax in the 6 day rally. It is therefore a magnet.
Yesterday was both a 1st and 2nd leg down from Friday’s high on the 5 minute chart. One more push down could be the end of a 3-day wedge bull. Hence, if today falls below yesterday’s low, the bulls will look to buy a reversal up. The bears want a strong break below the February 14 low.
However, the odds are against a big selloff from a 6-day micro double top without at least a micro double top forming 1st. Therefore, this 2 day selloff will probably test back up within a few days.
Yesterday’s Setups
Here are several reasonable stop entry setups from yesterday. I sometimes also show limit order entries and entries on the close of bars.