Pre-Open market analysis
The Emini had a 7 day rally to the EMA on the daily chart last week and sold off for 3 days. But since there were no pullbacks in the rally, the bulls were being aggressive. That means they will probably buy this 3 day selloff, expecting at least a small 2nd leg sideways to up.
Furthermore, the reversal up followed a parabolic wedge sell climax. Traders, therefore, expect the 2nd leg sideways to up on that basis as well.
On the weekly chart, last week was a bear bar and a pullback in a strong bear trend. It is, therefore, a Low 1 sell signal bar. Traders might want to see what’s below its low. Will there be eager bears selling below the Low 1 bear flag sell signal bar? Or will the bulls get a reversal up from a higher low on the daily chart?
The rally on the daily chart and the strong bear trend on the weekly chart create confusion. That makes sideways trading likely. However, the top of the trading range will probably be above 2700, as I discussed over the weekend.
Today will probably gap up. That will create a 3 day island bottom. That increases the chance of a bull trend day today.
Overnight Emini Globex trading
The Emini is up 90 points in the Globex session. There will probably be a big gap up. But there is only a 20% chance of a relentless trend up or down from the open.
When there is a big gap up, the Emini is far above the average price (the 20 bar EMA). Traders do not like to pay far above the average price. Therefore, when there is a big gap up, there is an 80% chance of some trading range trading over the 1st hour or two.
The bears will try to create a wedge top or double top and then a reversal down. The bulls want to buy near the EMA. They will look for a double bottom or a wedge bull flag near the EMA.
If there is a trading range open, it is a sign of hesitation. It reduces the chance of a relentless trend day up or down. If there is a trend after a trading range, it will typically evolve into a trading range or reverse after a few hours.
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 and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).
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.
If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.