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Emini: Sell Signal, But In Trading Range

Published 06/27/2017, 09:34 AM
Updated 07/09/2023, 06:31 AM

Pre-Open market analysis


The Emini gapped up and sold off yesterday, but was mostly a trading range day. Nothing has changed from the weekend. The Emini is exceptionally overbought on the weekly chart. Hence, it is likely to sell off 100 points over the next few months to test the March 27 low. This is the bottom of the wedge rally. The wedge rally is likely a bull leg in what will become a trading range for the next several months.

Yet, there is no clear top yet. Furthermore, buy climaxes can extend much further than what appears likely. Therefore, the rally could continue up indefinitely. More likely, it will begin to reverse from here or from a minor new all-time high.

Because most days over the past month have been mostly trading range days, the odds are that today will be another. However, traders need to be ready for a big bear trend day forming at any time.

The next week is typically up. But, because of the weekly buy climax, the reversal down to the weekly moving average can begin at any time.

Overnight Emini Globex trading


The Emini is down 2 points in the Globex market. It therefore might gap below yesterday’s low. Yesterday is a sell signal bar on the daily chart. Furthermore, it is a double top lower high with last week’s all-time high.

As climactic as the weekly chart is, all of the reversal attempts on the daily chart over the past several months have failed. The odds are that this one will as well. Therefore, traders expect another trading range day. Hence, they expect a trend one way for a couple of hours. Then, they expect either a trading range or a reversal. Most days for the past month behaved this way, and therefore today will probably be another.

However, a 100 point reversal down is likely to begin soon. Therefore, day traders will be ready for a big bear trend day at any time. This is unlike most of the days of the past month where selloffs reversed back up in the middle of the day.

While there are many types of bear trends, the strongest is a small pullback bear trend. If there is a selloff that looks weak and like a bear leg in a trading range day, but it forms a couple of gaps down in the 1st 2 hours, day traders should consider swing trading part of their position. By a gap, I mean that a pullback from a breakout does not overlap the breakout point. This is how small pullback bear trend days begin. If today becomes one, it an sell off relentlessly and very far.

Yesterday’s setups

Emini 5 Min Chart

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