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Friday closed early, but it closed below the open and the midpoint of the range. It was a bear bar on the daily chart and a reversal down from the top of the 2 month trading range.
Traders do not yet know if the pullback will last only 1 – 3 days, like all of the other pullbacks for 2 months. With the daily chart in a buy climax, the pullback might instead last a couple weeks. If so, a reasonable target is the start of the bull channel. That is either the October 18 or October 31 low.
I have been saying that the Emini was probably going to begin a 2 week, 50 – 100 pullback by the end of November. If this is not the start, it will probably begin within a couple weeks.
A buy climax typically attracts profit takers. But the bull trend is so strong that the bulls will buy the pullback. Therefore, the best the bears can probably get is a 2 – 3 week pullback. They will likely need a double top before they can get a 5% correction.
The Emini rallied overnight and then reversed down. It is currently unchanged. Traders know that many bulls will be quick to take profits in the extended buy climax on the daily chart. There is therefore a higher probability of one or more bear trend days this week.
Furthermore, many bulls will take profits above any recent high. Traders should expect a 50 – 100 point pullback to begin this week. Even though the Emini has had many bull days over the past several weeks, profit taking will probably begin to create some bear days. That reduces the chance of a continued strong bull trend this week.
Here are several reasonable stop entry setups from Friday. 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. Buyers of the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day.
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.
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