The E-minii reversed up from a small wedge bottom last week on the daily chart. It normally would have at least a small 2nd leg up. However, with the insanity of last night’s presidential debate, the swing down might resume today. The country might be so distracted and angry that they might not be willing to buy right now, at least at the current price. We’ll find out today.
If today is not a huge bear day, the bulls will probably get at least a small 2nd leg sideways to up. But if today is a huge bear day, the 3-day rally might be forming just another lower high in the 4-week bear trend.
I said yesterday that the pullback did not reach the 60-minute EMA. I further said that it might have to get down there before the bulls can get a 2nd leg up to the September 16 lower high.
Whether or not the rally continues up to above 3400, traders should expect the Emini to fall below the July 30 low at the bottom of that streak of 9 consecutive bull bars in early August. Consequently, the upside from here should be small, and the rally will likely end within a week or so, if it did not already end with the debate.
Overnight Emini Globex trading
The Emini is down only 3 points in the Globex market after selling off strongly from last night’s debate. So far, the technical factors are more important than the debate. As I said above, traders expect a 2-legged rally up to the top of the small wedge on the daily chart. As long as today is not a big bear day, that is still what is most likely.
Most of the trading over the past 2 days has been sideways. Since the Emini should work up to above 3400 over the next week, day traders will be looking to buy selloffs, hoping for a resumption of Monday’s rally.
Even if today is a 3rd consecutive sideways day, the daily ranges have been big. Therefore, day traders would expect at least one or two swing trades, even if today is a 3rd trading range day.
Can today be a huge bull or bear trend day? Any day can be. If there is a strong trend, up is more likely because the reversal up from the wedge bottom has not lasted as long as it should after a 3-week wedge. Also, it has not yet reached the start of the wedge, which traders expect it to do.
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. I do not want the lines to be distracting. If they are longer, I make them dotted. But, they have to be visible, so I make the shorter ones solid. 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 Emini.