Pre-Open market analysis
Yesterday triggered a sell signal on the daily chart after the 1st pullback to the EMA in a bear trend. However, following a 7 day bull microchannel, the bears will probably need at least a micro double top before they get a test of the low.
There was a late reversal up yesterday on the 5 minute chart from a big wedge bottom. That makes at least a small 2nd leg up likely today.
In addition, last week is a buy signal bar on the weekly chart. The buy was triggered this week when this week broke above last week’s high. The bulls see yesterday as a pullback from the break above last week’s high.
When there are conflicting signals, there is confusion. That usually results in a trading range.
Finally, there is uncertainty about tomorrow’s unemployment report. Everyone knows it will be bad. No one knows how the market will react. It is still more likely that the bulls will get a 2nd leg sideways to up before there is a new low.
Overnight Emini Globex trading
The Emini is up 25 points in the Globex session. There will probably be a 2nd leg sideways to up after yesterday’s late rally from a big wedge bottom on the 5 minute chart.
A wedge with big swings up and down like that typically evolves into a trading range. With tomorrow’s unemployment report being unusually important, that increases the chance of a mostly sideways day today. The confusion over the buy signal on the weekly chart and the sell signal on the daily chart further increases the chance of sideways trading.
Day traders should expect at least one swing up and one swing down today. Any day can be a big trend day. However, the odds favor trading range trading 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 (see Online Course/BTC Daily Setups).
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.