I wrote before yesterday’s open that the wedge bottom on the 60-minute chart would probably lead to a rally yesterday. The reversal up was from a test of the February 12 gap. This rally is another attempt to break strongly above 2800. That has been resistance for over a year.
Yesterday’s rally was extreme and therefore unsustainable. That makes it a buy climax. Buy climaxes created exhausted bulls who take profits. The Emini will probably go sideways to a little down for a day or two starting today or tomorrow.
But, the momentum up is strong. The bulls will buy pullbacks. They expect the rally to continue to above the 2800 start of the bear channel on the 60 minute chart.
Overnight Emini Globex Trading
The Emini is up 4 points in the Globex session. There might be a small gap up on the open. Small gaps typically close in the 1st hour.
Yesterday was a buy climax. Today therefore has a 50% chance of follow-through buying on the open. The next target is the 2800 Big Round Number. However, there is only a 25% chance of another strong bull trend day that lasts all day.
There is a 75% chance of at least 2 hours of sideways to down trading that will start by the end of the 2nd hour. While it is possible that today will be a bear trend day, it is more likely that the best the bears will get is a trading range.
Since there were 3 legs up yesterday, there is a wedge bull channel. The bears might be able to test the bottom of the 1st or 2nd pullbacks in the wedge. That would be a test down to around 2800.
Yesterday’s Setups
Emini small pullback bull trend and buy climax
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.