Pre-Open market analysis
The Emini gapped up to a new all-time high yesterday. Since yesterday was a Monday, there is also a gap up on the weekly chart.
The bulls want a measured move up. Their minimum goal is based on the height of the 5-day bull channel from the October 18 low to the October 24 high. Since it was about 40 points, their 1st target is around 3055.
The bears want the gap to close this week. If there is a gap down, there would then be an island top.
When there is a gap above important resistance, the Emini often goes sideways for a day or two. It then decides if the breakout will succeed or fail.
Tomorrow’s FOMC announcement is a potential catalyst for a big up move up or down. Since traders may wait for the news before trading aggressively, there is an increased chance of sideways trading today.
Overnight Emini Globex trading
The Emini is down 2 points in the Globex session. It, therefore, might have a small gap down on the open. That would create a 1-day island top. Island tops and bottoms are typically minor reversal patterns. Also, a small gap usually closes in the 1st hour. It would not significantly increase the chance of a failed breakout above the July all-time high.
Yesterday was a small trading range day. Tomorrow’s FOMC rate cut announcement is a potential catalyst. Consequently, traders expect that today will probably be another mostly sideways day.
Sometimes traders front-run a major announcement. That means there is a slightly increased chance of a big trend up or down today. Unless there is a series of big trend bars, day traders will assume that today will again have a lot of trading range price action.
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.