Pre-Open market analysis
The Emini made another new high yesterday, but it sold off after the 1st hour. Yesterday is a sell signal bar for today. It formed a Low 2 top with Friday.
As I wrote over the weekend, traders should expect a 5% correction to begin within a few weeks. This is a good location for bulls who are trading the daily and weekly charts to take some profits.
Was yesterday the start of the correction? It is too early to tell. But there is an increased risk of one or more big bear days coming soon. Once traders see them, many will take profits and more bears will sell, expecting a 2 – 3 week pullback.
Overnight Emini Globex trading
The Emini is down 2 points in the Globex session. Because of the buy climax on the daily and weekly charts and the sell signal bar yesterday, there is an increased risk of a bear trend day today.
However, I wrote over the weekend that this week would most likely form a pause bar on the weekly chart. That means a smaller bar that might close near the open.
Today is probably going to open near the open of the week. That could be a magnet for the remainder of the week. If so, both today and tomorrow would then probably oscillate around it. There is an increased chance of trading range price action through tomorrow’s close. Also, the week will probably close either a little bit above or below its open and form a small doji bar on the weekly chart.
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. 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.