Pre-Open Market Analysis
Yesterday's Emini went above last week’s high and therefore made another all-time high. Furthermore, it was the 7th consecutive bull trend bar on the daily chart. That is unusual and therefore climactic. Also, the past 2 weeks formed a 3rd leg up in a tight bull channel on the daily chart. As a result, the chart has a parabolic wedge buy climax, which usually will attract some profit takers.
In addition, last week was a bigger bull bar on the weekly chart. When there is a bigger bull bar after about 5 bars in a Buy The Close rally, it typically begins to attract profit-takers. Many bulls begin to prefer to buy pullbacks instead of buying at the market and on strong bull closes (“Buy The Close” type of bull trend).
This increases the chance of a bear bar this week on the weekly chart. A 7th consecutive bull bar on the weekly chart would be very unusual. However, the bulls will buy the 1st 1 – 2 week, 50 – 100 point pullback.
While most recent days have had a lot of trading range price action, there is an increasing chance of one or more strong bear trend days soon. Until then, the bulls keep buying every pullback on the 5 minute chart. They might continue to do so until the Emini reaches the top of the channels on the daily and monthly charts at around 3150 – 3175.
Overnight Emini Globex Trading
The Emini is up 8 points in the Globex session. It therefore might gap up on the open. Since the rally is very strong on the daily charts, the Emini might get vacuumed up to the monthly bull trend line at around 3175 within the next couple weeks.Most recent days have had a lot of trading range price action, yet all have closed above the open. Even though this is an extreme buy climax, day traders are continuing to focus on buying. They will continue to do this until there is a strong reversal down.This is like a game of musical chairs. Once the music stops, there will be a panic to grab a chair (exit longs). Right now, the music is still playing. But, it could stop any day this week. That would result in a bear trend day.
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.