Pre-Open Market Analysis
Yesterday triggered a buy signal on the daily chart by trading above Friday’s high. However, yesterday was a trading range day and it had a bear body on the daily chart. This is therefore a weak entry for the bulls.
That makes sense because after 7 consecutive bull bars on the weekly chart, this week will probably close below the open. Consequently, traders will look to sell rallies this week.
After a 7 week bull micro channel, there will probably be buyers not far below last week’s low. If the bears get a reversal down this week, it will probably only last 2 – 3 weeks.
With limited near-term upside and downside, the Emini will probably begin to form a trading range for the next 2 – 3 weeks. Since the daily and weekly charts are in buy climaxes, there is an increased chance of a surprise bar down on the daily chart this week.
Overnight Emini Globex Trading
The Emini is up 19 points in the Globex session. It will therefore gap up. This will create a 3 day island bottom.
When there is a gap up, there is an increased chance of a trend. A gap up makes a bull trend slightly more likely than a bear trend. However, the weekly chart will probably have a bear body this week. Therefore, the odds are against a strong trend up from here that lasts more than a couple days.
A big gap up only has a 20% chance of leading to a strong trend from the open. Most of the time, there is at least one reversal in the 1st hour. The bulls will look for a wedge bull flag or a double bottom around the EMA.
The bears want a wedge top or a double top. Therefore, there will probably be a trading range for the for hour or so, even if there is a strong initial move up or down.
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.