The E-mini weekly and monthly charts are in bull trends, and the bulls want the year to close near its high. Additionally, there are 5 consecutive bull bars on the daily chart, and last week closed at a new all-time high. That makes at least slightly higher prices likely this week. But 5 consecutive bull bars is fairly unusual and it therefore increases the chance of a bear bar today or tomorrow.
One problem that the bulls have is that the High 1 buy signal from 3 weeks ago on the weekly chart had 2 bear bars. That is a weak buy setup. Normally, a rally from a weak bull flag only lasts about a couple bars. Last week was the 2nd bar. That increases the chance that this week will be sideways to down.
As I mentioned over the weekend, there will probably be a reversal down at least to the midpoint of the 4-month trading range beginning at some point in December, and it can come at any time. The rally over the past 2 weeks is a micro wedge on the daily chart. That increases the chance of a reversal down starting this week.
Most day’s have had reversals for over a month
Most days for the past 6 weeks have closed either around the middle or near the open. That means that they have had swings up and down on the 5-minute chart. Day traders will expect that again today. But if there is a series of strong trend bars today in either direction, they will look for a trend day.
Also, the rally from late October only had one pair of big bull bars closing near their highs. With Friday closing near its high, this reduces the chance that today will be a 2nd consecutive big bull day closing near its high. If today is near the high after 11 a.m. PST, day traders will look for at least a minor late selloff.
Overnight E-mini Globex trading
The E-mini is down 9 points in the Globex session. Today will therefore open around Friday’s 5-hour trading range. Because traders thought that this was an area where the price was fair on Friday, there is an increased chance that today will go sideways in that range on today’s open. Day traders will then look for a double bottom or wedge bottom for a swing up, or for a double top or wedge rally for a swing down.
But, consecutive big bull trend days have been rare for 2 months. That reduces the chance that today will be a strong bull trend day.
Can today begin a December selloff? A selloff can come at any time. However, it usually does not begin after 5 consecutive bull days. Therefore, traders will expect the Emini to go sideways for at least a couple days, before there is a swing down on the daily chart.
Friday’s setups
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. Buyers of both 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 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.
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.