Pre-Open Market Analysis
Yesterday was an outside down day on the daily chart and Emini closed near its low. It broke above a 5 day wedge top and reversed down. It is therefore a sell signal bar for a failed breakout below a wedge top. In addition, it is the 2nd lower high since the July all-time high. As a result, it is a sell signal bar for a reversal down from the top of a 4 month triangle.This is also a failed breakout above the 3000 Big Round Number. If the bears get a bear bar today, especially a big one, there will probably be a couple small legs down over the next week or two. An obvious target is the big gap above the October 10 high.If instead today is a bull inside day or a bull reversal day, today will be a buy signal bar for tomorrow. The bulls would again have about a 50% chance of a new all-time high within a few weeks.
Today Will Tell Us What To Expect Next Week
Today is important because it will give a clue for what to expect over the next week. If today is an inside day or if it trades below yesterday’s low and reverses up, it will be a buy signal bar on the daily chart for tomorrow. Traders would then discount yesterday and assume that the rally will continue up to a new high. If there is a new high in October, there would be an outside up bar on the monthly chart.On the other hand, if today goes below yesterday’s low, it will trigger the sell signal. This is likely. If today is a big bear day closing on its low, the selloff will probably continue down for at least another week and close the gap at 2948.25.
Overnight Emini Globex Trading
The Emini is down 1 point in the Globex session. The problems for both the bulls and bears are that most days over the past 2 weeks have had reversals and the chart has been sideways for 6 days. These factors reduce the chance of clarity today. Therefore, today will probably not be a big bear day closing on its low. In addition, it will probably not be a big bull day closing on its high.Day traders expect confusion and at least one reversal today, like most recent days. But because of the increased chance of a trend day up or down, they will be willing to swing trade if they see 2 – 3 strong trend bars up or down with no significant tails. The odds favor more trading range price action instead of a relentless trend today.
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.