– The bears got an inside bar yesterday on the daily chart, making the market more neutral.
– The bulls have a high 1 buy above yesterday’s high. However, the signal bar is a bear bar in tight trading range and a four bar bear micro channel.
– The bears see a breakout pullback short below yesterday’s low, but it is forcing bears to sell at the bottom of a likely pullback for the bulls.
– After the four consecutive bull bars last week, the odds are the Emini will have a rally for a few days testing the high of last week.
– The bears are hopeful they can turn the market back down after a test of last week’s high. This would create a double top or a wedge top (Jan. 26, Feb. 2) and give the bears a reasonable chance at a short setup.
– The market is very close to 50%-50% for both the bulls and the bears. The market is deciding between testing the January lows or the all-time high.
– The Emini on the daily chart is clearly in a trading range, and the price is in the middle of the range from the October 2021 lows to the low of January 2022. The middle of any trading range is a bad area to initiate long or short positions, so it is better for most traders to wait for more clarity.
Emini 5-minute chart and what to expect today
– Emini is down 12 points in the overnight Globex session.
– The market will probably have a trading range open and test either the high or low of yesterday.
– The market has already tested yesterday’s low during the early hours of the Globex session, so the market may have to test yesterday’s high as well.
– Traders should expect limit order trading on the open and wait for either a strong breakout with follow-through or wait for a credible stop entry for a swing.
Yesterday’s Emini 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. Buyers of both 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. These therefore are swing entries.
It is important to understand that most swing setups do not lead to swing trades. As soon as traders are disappointed, many exit. Those who exit prefer to get out with a small profit (scalp), but often have to exit with a small loss.
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.