Emini And Forex Trading UpdatePre-Open Market Analysis
The Emini had unusually big swings up and down yesterday. The big swings up tell traders that the bears are beginning to take some profits. Additionally, the bulls are beginning to buy for a minor reversal up this week, which is what I have been saying for a few days.
This is consistent with the parabolic wedge sell climax on the daily chart. The month-long bear channel has 4 legs. That increases the chance of rally for a few days. The May 13 low is a breakout point and just above the 2800 Big Round Number and the 20 day EMA. These should get tested within a couple weeks.
When there is a rally above a tight bear channel, it typically is minor. It will probably last at least a few days.
The gap above the February 11 high is still a magnet below. If the reversal up is not too strong, the odds will continue to favor a closure of that gap before a test of the all-time high. However, that test is still likely at some point within a few months.
By trading below the May low yesterday, the Emini triggered a monthly sell signal. However, it spent yesterday oscillating around that low and closed just above it. Traders are deciding on whether the sell signal will succeed or fail. The odds favor a bounce.
Overnight Emini Globex Trading
The Emini is up 18 points in the Globex session. I have been saying that the parabolic wedge bear channel will probably lead to at least a 2 – 3 day rally this week. That is still the case.
Today might gap up and begin a rally to the top of the bear channel. If there is a gap up today and it stays open, there will be a 2 day island bottom. That is a minor reversal and it would increase the chance of higher prices for at least a couple days.
Furthermore, the daily chart has been in a trading range for 18 months. Limit order traders who bet against breakouts, scale in, and use wide stops typically make money. Therefore, the bulls will probably get a bounce above the March 13 breakout point of 2802.00. That will be around the 20 day EMA.
Since the odds favor a bounce for at least a day or two, there is an increased chance of a bull trend day today. Day traders should expect an attempt to form an early low of the day. They will therefore look for either a rally from the open or a brief selloff on the open and a reversal up.
Traders should never assume that the market will only do one thing. They always need to be ready to do the opposite of what is likely. They will be willing to short if there is a strong reversal down.
Most days over the past month have had swings up and down. That is likely again today. However, because of the likelihood of a move up to 2800 starting soon, there is an increased chance of a bull trend day.
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 have access to a much more detailed explanation of the swing trades for each day.
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.