Pre-Open market analysis
The Emini had a strong bear breakout midday yesterday. It triggered the parabolic wedge top sell signal on the daily chart by falling below Tuesday’s low. It also broke below the bull trend line at the bottom of the 6-week tight bull channel. Finally, it dipped back below the 3100 Big Round Number, which was resistance for several days last week.
However, it closed the day above the support and above the middle of the day’s range. It was a bear doji bar on the daily chart and not a strong bear day. Yesterday is now a weak buy signal bar on the daily chart for a High 1 bull flag.
Because it is weak buy setup in an overbought market, there will probably be sellers not too far above its high and above Tuesday’s all-time high. Furthermore, the open of the week will probably be a magnet through tomorrow’s close. Traders will expect this to limit both the upside and downside for today and tomorrow.
Has a 1 – 2 week pullback begun?
Yesterday is a good candidate for the start of the 1 – 2 week pullback that I thought would begin in November. The pullback so far has been 40 points. I have been saying that it would probably be 50 – 100 points. Also, it is likely to last more than a couple days. Consequently, traders should expect sideways to down trading over the next week. This is true even if there is one more new high 1st.
Will this be the 8% correction that some on TV are predicting? Probably not. After 6 bull bars on the weekly chart, the bears will likely need at least a micro double top on that chart before they can get more than a week or two of selling.
Overnight Emini Globex trading
The Emini is up 4 points in the Globex session. Yesterday’s strong selloff and then big reversal up created confusion. Confusion typically results in a trading range.
This is especially true with the Emini so close to several magnets. The open of the week is the most important. Traders expect a small bear body on the weekly chart this week after last week’s buy climax and 6 consecutive bull trend bars on the weekly chart. The other magnets are the 3100 Big Round Number, the EMA on the 60 minute chart, the bull trend line on the daily chart, and yesterday’s high.
Since trading range trading is likely today and tomorrow, day traders should expect at least one swing up and one swing down during both days. A strong trend is unlikely.
Yesterday’s Setups
