Pre-Open Market Analysis
Yesterday gapped up to the top of the 3-week wedge channel. It sold off to below Monday’s high and closed the gap.
Since yesterday had a bear body on the daily chart, it is a sell signal bar for today. There is a wedge top and a higher high major trend reversal. However, if the bears get a reversal down, it will probably lead to a continuation of the 6-week trading range that began around Christmas and not a bear trend.
A trading range disappoints bulls and bears. Consequently, tomorrow will probably not be a strong bear day. Most days will have a lot of trading range price action.
If the Emini in fact has been in a trading range since Christmas, the target for the bears would be the bottom of the range. That would be about a 5% pullback.
Can the 2-week rally continue much higher? If the bulls get 2 or 3 more bull bars, then the Emini is probably resuming its bull trend. Without that, the Emini is more likely at or near the top of a 6-week trading range. That means traders will look for a bear leg to begin within the next several weeks.
Overnight Emini Trading
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.
If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.