Pre-Open market analysis
The Emini gapped down yesterday. Since it again fell below last week’s low, it triggered the weekly sell signal for a 2nd time. However, it rallied from a double bottom and a test of the May 22 high. That was the breakout point for the June rally. Additionally, yesterday was the 3rd consecutive bull day in a 5 day pullback. It is unusual to have 3 bull bars as the market is falling, and this is a sign of buying pressure. Therefore, it reduces the chances of much lower prices.
Overnight Emini Globex trading
Since yesterday was a wedge rally, it was a wedge bear flag on the 5 minute chart. The bears want a break below yesterday’s bull trend line and a test of yesterday’s low. They want the 5 day bear trend to continue and to fall below the May 22 high.
However, the Emini is up 7 points in the Globex session. It might therefore gap above yesterday’s high and the 60 minute EMA. This would be a bull breakout above yesterday’s wedge bear flag. The bulls would then want a measured move up based on the height of yesterday’s wedge.
Yesterday was a bull reversal day at key support. It is therefore a buy signal bar. This increases the chances of a big bull trend day today. A bull trend day is even more likely after 3 consecutive bull days in a 5 day selloff. However, if the breakout above the wedge reverses down, today could also be a bear trend day.
Every day for the past 2 weeks has spent a lot of time going sideways. If there is a trend up or down, there will probably be a lot of trading range trading as well. Day traders need to be ready for anything today, but the odds are there will be at least one good swing trade.
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.