Pre-Open market analysis
The Emini sold off strongly yesterday and traded below last week’s low. That therefore triggered a sell signal on the weekly chart. Although it rallied back above the low, if it breaks strongly below again later this week, that be a 2nd entry sell signal. Consequently, it would have a higher probability of leading to lower prices. Yet, the bears need a strong breakout, and they have to prevent a reversal back up.
In addition, the sell climax dipped below the August 8 high and reversed up strongly. It tested it two more times and reversed up both times. Therefore yesterday’s strong selloff was a sell vacuum test of the August 8 high breakout point.
However, since the monthly chart is so overbought, the odds of much higher prices without a 1 – 3 bar (month) pullback are small. However, instead of going down, the Emini could go sideways for a few months and then continue higher. Since the buy climax is so extreme, the Emini is more likely to pull back at least 100 points within a few months.
Overnight Emini Globex trading
The Emini is up 1 point in the Globex session. Since yesterday’s reversal up from the August high was strong, the odds favor an attempt at follow-through buying today. Yet the daily chart has been in a tight range for 10 days. Therefore the odds are against a strong bull trend day today. More likely, it will be like most of the past 10 days and have a lot of trading range trading. Yesterday’s reversal up from 3 tests of the August high was strong enough to make a bear trend day unlikely.
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.