Pre-Open Market Analysis
Friday was the emini's 4th push up in a wedge top on the daily chart. Because it was a bull day, it is a weak sell signal bar for today. However, if today forms a bear day or rallies and reverses to form a reversal day, today could be a better sell signal bar for tomorrow. The weekly chart broke above its 8-month bull channel 5 weeks ago. Most channel breakouts fail. In addition, the buy climaxes on the daily, weekly, and monthly charts are the most extreme is history by some measured. Yet, until the bears get consecutive strong bear bars, the odds continue to favor higher prices.
Overnight Emini Globex Trading
The Emini Globex chart is unchanged in overnight trading. Since Friday was a bull trend day, today is unlikely to be big bear trend day. Yet, because the chart has been in a wedge for 3 weeks, most moves up and down only last 1 – 3 days. Therefore the odds are against a big bull day today.
Most likely, today will be just another day in the 3-week wedge bull channel. However, the bears want at at least a small bear day so that today would be a sell signal bar for tomorrow. If there is a rally, the bears want it to reverse down and create a reversal bar on the daily chart. That would also be a sell signal bar for tomorrow.
The bulls see the 3-week wedge top. They are trying to get a strong breakout above and then a 40-point measured move up. A wedge is a triangle that is sloped up. In general, the 1st breakout up or down fails 50% of the time. Since all of the higher time frames are in buy climaxes, a strong bull breakout probably has a 60% chance of failing within a few days.
Friday’s Setups
I was speaking in Las Vegas on Friday and therefore did not prepare a chart for today that shows reasonable setups from Friday’s.