Pre-Open market analysis
The Emini on Friday had a trading range day. Because the monthly chart had a 2 bar breakout above a likely small final bull flag, June is a sell signal bar on the monthly chart. Since the monthly chart is in a tight bull channel and June was not a strong sell signal bar, this is not a strong sell signal.
However, because it is an obvious sell signal, July will probably trade below June’s low to trigger the sell. The market needs to know if there are more buyers or sellers below the sell signal bar. Since this is a likely small final flag reversal, if July trades below June, it will probably lead to a pullback lasting a few bars. That is a few months.
But, the bull trend is strong on the monthly chart. Therefore, the best the bears will probably get over the next few months is a pullback in the bull trend, and not a bear trend.
Overnight Emini Globex trading
The Emini is 4 points in the Globex market. While the bulls still hope for a strong break above the all-time high, the odds are that the bears will continue to sell rallies. They will bet that the Emini has begun a 2 – 3 month reversal back down to the May 18 2342.25 low, whether or not there is a small new high 1st.
The Emini is still in the middle of a month-long trading range. In addition, most days in that range have been trading range days. Furthermore, the 4th of July week is usually the 2nd quietest week of the year (Christmas week is the quietest). Consequently, today will probably be another trading range day. As a result, traders will look for any initial rally or selloff to reverse or enter a trading range within 1 – 3 hours.
The odds are against a strong, sustained trend up or down. Therefore, the bulls see Monday’s selloff as a bear channel and hence a bull flag. The odds favor a bull breakout and then a trading range.
Friday’s setups
