Pre-Open market analysis
The Emini has parabolic wedge tops on the daily and monthly charts. Furthermore, the weekly chart has an extreme buy climax. This therefore increases the chances of a reversal down for a couple of months. Yet, there is no top, and until there is a top, the odds favor higher prices.
Since Friday traded below Thursday’s low, it triggered the sell signal on the daily chart. However, when a parabolic wedge top sell signal triggers, there is rarely a strong reversal down. Instead, the Emini usually begins to pull back in a tight bear channel.
Hence, this means that the bars are usually small and the days are mostly trading range days. Therefore, if last week was the start of a correction, the correction will probably be mostly sideways for at least a week.
Friday is also a buy signal bar in a strong bull trend on the daily chart. Since it closed on its high, the odds are that today will trigger the buy signal by trading above Friday’s high. Yet, because of the parabolic wedge top and Wednesday’s FOMC announcement, the odds favor mostly sideways for a couple of days.
Overnight Emini Globex trading
The Emini is down 1 point in the Globex market. This means it is within a couple of points of Friday’s high. Since Friday is a strong buy signal bar in a bull trend, the Emini will probably not be able to escape the magnetic pull above Friday’s high. Consequently, the odds favor a test above Friday’s high. Yet, because of the parabolic wedge top, Wednesday’s FOMC announcement, and consecutive trading range days, the odds are against a a strong rally today.
The parabolic wedge rally might have one more strong push up before leading to a 5 – 10 bar pullback. Traders therefore have to be prepared for a possible bull trend day. A strong bear trend day is less likely, and today will probably be mostly a trading range day.
Friday’s setups
Here are several reasonable stop entry setups from Friday. I sometimes also show limit order entries and entries on the close of bars.