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E-mini: Weak Follow-Through After Breakout

By Al BrooksStock MarketsJun 14, 2021 09:36AM ET
E-mini: Weak Follow-Through After Breakout
By Al Brooks   |  Jun 14, 2021 09:36AM ET
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E-mini pre-open market analysis - daily chart

Thursday saw the E-mini close above the May 7 high, which was the Breakout Point at the top of a 2-month trading range. On Friday, it had a small bull body, so consecutive bull bars trended with closes above that high. As a result, we have an increased chance for a 200-point measured move. And, since both bull bars were small, E-mini is in a weak follow-through breakout so far.

While it increases the chance of higher prices, it reduces the chance that the breakout will reach a 200-point measured move up. Bulls need bigger bull bars this week to convince traders that the breakout will succeed.

Friday was a doji inside day after Thursday’s new all-time high. As a doji bar, it is both a weak sell signal bar, for a failed breakout and a weak High 1 buy signal bar. Weak buy and sell signals create confusion and increase the chance of sideways trading for a few days. Until there is a strong reversal down, traders will continue to buy every brief selloff, as they have been doing for a year. A strong trend is always more likely to get another new high than reverse into a bear trend.

Overnight E-mini Globex trading on 5-minute chart

  • Up 1 point in the Globex session.
  • Day traders are still deciding whether last week’s small breakout will succeed or fail.
  • Since it is at the top of 2-month trading range, increased chance of big trend day in either direction.
  • After several weeks with at least one reversal every day, day traders will expect at least one reversal again today.
  • But if there is a series of strong trend bars in either direction on the open, day traders will begin to bet on a big trend day.

Friday’s E-mini setups

E-mini Bull Trend Reversal
E-mini Bull Trend Reversal

E-mini: Weak Follow-Through After Breakout

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E-mini: Weak Follow-Through After Breakout

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