Pre-open market analysis
The Emini gapped down yesterday and formed a one-day island top. But, island tops and bottoms are minor reversals. After trading in a tight range, the bulls got a small late rally. Since it closed near its high, it is a buy signal bar for today. If today gaps up, yesterday would be another island reversal.
The Emini has a double top and a double bottom over the past seven days. It is therefore in a tight range and in Breakout Mode.
The seven-day tight trading range shows no sign of ending yet. At the moment, one more leg up above the December 12 high is likely.
Even if the bulls break above the December 12 top of the crash, the odds are that the Emini will test last February’s low sometime in the next month. Traders will look for a test down to 2,500 at some point in February.
Overnight Emini Globex trading
The Emini is up four points in the Globex session. It therefore might gap above yesterday’s high. That would create a one-day island bottom.
However, an island reversal is minor. In addition, a small gap typically closes in the first hour. Finally, most of the trading over the past six days has been in a tight trading range. This is neutral, trading range price action. That is likely again today.
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. 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.