Pre-Open Market Analysis
Yesterday traded above Friday’s high and above last week’s high. It sold off below Friday’s low and last week’s low. Therefore, yesterday was an outside down bar on the daily chart. In addition, this week is an outside down bar on the weekly chart.
By going below last week’s low, the Emini had its 1st pullback on the weekly chart in 10 weeks. The bulls have been so eager to buy that they have not waited for a pullback. They now have a chance to buy a pullback. Many will take it. As a result, there is a 30% chance that this week will go back above last week’s high and become an outside up week.
More likely, the Emini will pull back for at least another week. A first target is the 20 day EMA. The bears want at least 2 legs down on the daily chart. Yesterday was a Bear Surprise Bar on the daily chart. It therefore will probably lead to at least a couple legs sideways to down. However, after a Bear Surprise Bar, there is often about a 5 bar tight trading range before the 2nd leg down begins. Therefore, the Emini might be mostly sideways over the next week.
The bears want a big selloff today. After yesterday’s big rally, that is unlikely. The bulls want today to be a bull bar on the daily chart. It would then be a buy signal bar for Wednesday. They then want the week to go back above last week’s high. The odds favor more sideways to down instead.
One possibility for today is a bull inside bar, which often follows a bear outside bar. The rally at the end of yesterday was enough to confuse traders. Most likely, the Emini will be sideways for at least a day or two.
2-Month Pullback After One More New High
I mentioned yesterday that the pullback could last a couple of months since the buy climax is so extreme. There almost certainly will be at least a couple months of sideways to down trading that starts within the next few months.
However, the momentum up over the past 2 months was strong enough to make the 1st reversal down likely to be minor. Therefore, the bulls will probably get one more new high after a 2 – 3 week pullback. Then, the 2 -3 month pullback will begin.
Overnight Emini Globex Trading
The Emini is up 4 points in the Globex session. The bulls hope that yesterday’s late rally will lead to a new high. However, it is more likely that it was the start of a 2 – 3 week pullback. Consequently, the late rally will probably be a bear flag.
The resistance of 2800 has been strong for over a year. This rally will likely stall today or tomorrow around that target.
Yesterday’s big bear breakout on the 60 minute chart is a good candidate for a spike down in a Spike And Channel Bear Trend. The channel typically has at least 3 pushes. Yesterday’s selloff was the 1st. Traders should expect at least 2 more legs down on the 60 minute chart over the next couple of weeks.
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. 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.