Pre-Open market analysis
The Emini had a weak bull trend yesterday. However, the rally broke above the top of the 4 week trading range. A weak rally can still lead to a big bull trend if there is follow-through buying. Therefore, the bulls need more trend days this week. If they get them, then the move back to 2800 will likely be underway. A gap up any day this week will create a 4 week island bottom. If the gap were to stay open for a few days, the rally would probably continue up to 2800. The chart is becoming increasingly likely to be entering a bull trend.
The bears need a strong selloff this week. That means at least a couple consecutive bear days closing near their lows. At a minimum, they want today to have a bear body. It would therefore be a bad follow-through day for the bulls and reduce the chances of a continuation of the 3 week rally.
Overnight Emini Globex trading
The Emini is up 16 points in the Globex session. Therefore, today will probably open with a gap up. If the bulls can prevent the gap from closing, today’s gap up will have created a 3 week island bottom. An island bottom is a sign of strong bulls.
The odds would then favor a resumption of the bull trend on the monthly chart. Therefore, there would be an increased chance of a series of bull trend days over the next 2 weeks. Consequently, traders will be more inclined to look for an early low of the day each day. For example, if the Emini sells off on the open, the bulls will look to buy a reversal up, expecting a bull trend day.
The bears are losing control. They need to reverse this rally within the next couple of days. If they cannot close the gap and get a couple big bear days this week, then the 3 month correction is probably over. The odds now favor the bulls, and the bears are running out of time.
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.