Pre-Open Market Analysis
Yesterday traded below Friday’s low, which triggered a minor sell signal on the daily chart. Since yesterday was a small trading range day, it was a weak entry bar for the bears.
It was the 2nd consecutive doji bar on the daily chart. The bears need follow-through selling today to convince traders that last week’s rally has ended.
Yesterday was a pullback in a 2-week bull trend. It is therefore a buy signal bar for today. Since it was only a small bull doji and Friday was a doji, it is a weak buy setup.
The bulls also have a weak buy signal bar last week on the weekly chart. The bulls need a rally above last week’s high to trigger the buy. But after 3 bear weeks, there will probably be sellers not far above last week’s high.
The Emini is in the middle of a 4 month trading range. Every day for over a week has had at least one reversal. Yesterday was a small trading range day. Traders expect more trading range price action again today.
Overnight Emini Globex Trading
The Emini is up 8 points in the Globex session. It might gap above yesterday’s high on today’s open. That would trigger the High 1 bull flag buy signal on the daily chart.But a small gap up after a day-long tight trading range is not especially bullish. The bulls need consecutive big bull bars closing near their highs to make traders believe that today will be a bull trend day.If today goes above yesterday’s high, the bears will try to get an early reversal down. Since yesterday’s range was small, they will try to create an outside down day. That would increase the chance of lower prices later this week.After a 2 week rally and without a clear top, the odds favor at least slightly higher prices. But the past 6 days all have had at least one reversal. Therefore day traders will expect more trading range price action again today unless they see a strong move up or down in the 1st hour or so.
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.