E-mini pre-open market analysis
E-mini daily chart
Friday was a big bull reversal bar for E-mini. It was the second reversal up from below the August trading range. Now a lower low double bottom has appeared with the Sept. 30 low, making it a 2-month trading range. That said, Friday also had a big tail on top. That represents hesitation by the bulls, and it reduces the chance of a resumption of the 2021 bull trend from here. September was a bear bar on the monthly chart as well, so it is probably the start of a 2- to 3-month sideways to down correction.
The 4-week selloff broke far below the bull channel on the weekly chart. There is at least a 50% chance that the weekly Small Pullback Bull Trend has ended. If so, the correction should continue down for at least 15%, which is 50% bigger than the biggest pullback in the Small Pullback Bull Trend.
Because the September selloff lasted a lot of bars, and the E-mini is trying to hold at the bottom of the August trading range, the E-mini could bounce up to the Sept. 23 lower high.
The bears hope that the E-mini is in a bear trend. They have a 50% chance of being right. If they are, a 1- to 2-week rally from here should fail around the September 23 lower high. Bears want a double top with that high. A measured move down would be around 4100. A bear trend is a series of lower highs and lows. Each lower high is a failed reversal attempt. That means a bear trend typically has many strong rallies.
Remember, the minimum target on the weekly chart is 15%, which is around 3850. That is below the gap above the Apr. 1 high and below the 4,000 Big Round Number.
On the monthly chart, the selloff should last at least 2 to 3 months. Therefore, if the high for the year is in, the E-mini should fall below 4,000 this year. I have been saying that there is a 50% chance that Sept. 2 will remain the high for the year. That means there is a 50% chance of a new high. But if there is a new high this year, it will probably fail to get much above the September high since the monthly buy climax is extreme and the E-mini has been sideways for 3 months.
The bulls need to get bull bars closing near their highs and they need a strong break above the Sept. 23 lower high before traders will conclude that the correction has ended.
E-mini 5-minute chart and what to expect today
E-mini was down 5+ points in the overnight Globex session. Traders are deciding if Friday’s profit taking will be the start of a rally up to the Sept. 23 lower high or just a pause in the September bear trend.
The day after a buy climax day only has a 25% chance of being another strong bull day. There is a 75% chance that today will have at least a couple hours of sideways to down trading that begins by the end of the 2nd hour. Also, the E-mini is back in Wednesday and Thursday’s trading range and around the bottom of the August trading range. That further increases the chance that it could stall here for a few days.
Confusion is a hallmark of a trading range. The E-mini might be forming a trading range since the Sept. 20 low. If today is a trading range, there should be at least one swing up and one swing down since Friday’s range was so big.