Pre-Open Market Analysis
The Emini gapped down yesterday. It therefore created both a 2-day and a 1-month island top. Furthermore, the weekly chart is extremely overbought. Consequently, there is a 60% chance that yesterday was the start of a selloff to below the weekly moving average.
When there is a big gap, the Emini often goes sideways for a few days. The bears need follow-through selling. The bulls need a strong reversal up to reduce the odds of the selloff. The next few days will therefore be important.
Overnight Emini
The Emini is down 8 points in the Globex market. While yesterday is probably the start of a move below the weekly moving average, the daily chart is still in a trading range. Consequently, the bears will probably be disappointed by the lack of strong, immediate follow-through selling.
Hence, the correction will probably take more than a month. Furthermore, it will more likely be a Spike and Channel bear trend than a sudden collapse. Therefore, there will probably be at least 2 more legs down after the 1st pullback.
As a result of a bear channel on the daily chart, day traders will have swings up as well as down. This is true even though the daily chart is probably in a bear trend for a couple of months.