The E-mini broke above Friday’s high yesterday, triggering a High 1 buy signal on the daily chart. After consecutive strong months on the monthly chart, the E-mini will probably test above the May high in early June. The most important target is the March 3 lower high, which marks the start of the parabolic wedge sell climax. The beginning of a sell climax is always a magnet once there is a reversal upwards.
I mentioned that the bears will look to sell above the 200-day moving average up to around the March 3 high at 3,125.75 . Therefore, the sell zone is roughly between 3,000-3,150. Many traders are waiting for the rally to reach that March 3 high to start selling.
Traders think there will be a 50% pull-back from the 2-month rally before there is a new all-time high. The E-mini will probably trade up at least a little more before the bears sell.
The E-mini is up 12 points at the time of writing. It will, therefore, probably gap above yesterday’s high. It might even gap above the June high, possibly this week. Even though the rally is climactic, there is no top yet. Furthermore, there is room to rally above the March 3 high. That is resistance and therefore a magnet. Traders expect higher prices.
Yesterday’s rally was a 2nd leg up from Friday’s dramatic late rally. A rally today would be a 3rd leg up. That would increase the chance of a sell-off lasting a few hours on the 5-minute chart. It could last a day or two. However, when there is a bull trend on the daily chart and a magnet above, day traders are more interested in buying pull-backs than selling rallies.
The intensity of yesterday's rally increases the chance of more trading-range price action today. Also, the 2-hour trading range late in the day is a possible Final Bull Flag. If there is a gap up today, there is a greater chance of a sell-off at some point to close that gap.
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. I do not want the lines to be distracting. If they are longer, I make them dotted. But, they have to be visible, so I make the shorter ones solid. 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 (see Online Course/BTC Daily Setups).
My goal with these charts is to present an "Always In" perspective. If a trader was aiming to be "Always In" or nearly "Always In" a position all day, and they were not currently in the market, these entries would be logical points at which for them to get involved.
If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro E-mini.