Yesterday had a bear body, despite the huge gap up. I wrote on Friday that this was likely because a 6th bull day would be unusual. The bears want a lower high compared to the November high, and another failure at 2800. However, the 5 bulls days signify strong bulls. Consequently, the bulls will buy the 1st 1 – 3 day pullback. Therefore, there are probably buyers not far below today’s low.
Since the rally was climactic and the Emini is at resistance, the odds favor 1 – 3 sideways to down days. This is especially true with an unemployment report coming on Friday.
If the Emini gaps down this week, it will form another island top. However, island tops and bottoms are minor reversal setups.
What about the China trade news? Who cares? I am only interested in the charts, which reflect the composite of institutional opinion. They tell me if more dollars are buying or selling, and I want to do what the institutions are doing. They cannot hide it. The charts show us.
The Emini is down 7 points in the Globex session. Today will therefore probably open in the middle of yesterday’s range. While yesterday had a bear body, it held above Friday’s low. It was therefore a pause day, but not a pullback.
The Emini now has had 6 days without a pullback. While that is a sign of strong bulls, it is also becoming climactic. Consequently, the odds of a pullback are increasing. Yesterday’s bear body increase the chance of a pullback today. There will probably be a pullback today or tomorrow. In addition, Friday’s high is not far below. It is the bottom of yesterday’s gap up and therefore a magnet.
Six days without a pullback is a 7 day bull micro channel. That is a sign of persistent and strong bulls. They typically will buy the 1st 1 – 3 day pullback. Consequently, there are probably buyers not far below yesterday’s low.
Yesterday was a trading range day in a buy climax. Friday’s unemployment report is a catalyst. The odds are that today will be another mostly sideways day.
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. 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.
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