Pre-Open market analysis
Yesterday triggered a buy signal on the daily chart. But I said before yesterday’s open that it was a weak setup. Entering with stops in the middle of a 4 week trading range is low probability trading.
Yesterday sold off in a Small Pullback Bear Trend. It evolved into a trading range in midday. Since it was a bear day on the daily chart, it is a sell signal bar for today. But the problem remains. Entering with stops in the middle of a 4 week trading range is a losing strategy. There will probably be more buyers than sellers below yesterday’s low.
When a market is in a trading range, it tends to spend most of its time around the middle. Consequently, the Emini might be sideways for another day or two.
Overnight Emini Globex trading
The Emini is down 8 points in the Globex session. There might be a small gap down open. That would trigger a sell signal on the daily chart. But since the Emini is in the bottom half of a 4 week tight trading range, the sell signal is minor. That means that the odds of a big bear trend day are less.
The bears want follow-through selling after yesterday’s bear trend. However, the Emini has been reversing ever couple days for the past 4 weeks. Therefore it is equally likely that if there is a trend today, it will be up.
Sell climaxes typically lead to trading ranges. Yesterday was in a trading range for the 2nd half of the day. Trades expect that today will continue that range. They therefore will look for reversals up and down unless there is a strong breakout 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. 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.