Pre-Open Market Analysis
The Emini yesterday formed an outside up day and then an outside down day. It had several sharp moves up and down and formed a trading range day. But by closing below its midpoint, yesterday is now a sell signal bar for today.
The bears want a reversal down from a micro double top and a failed breakout above the July all-time high. However, unless reversal down is big and has follow-through selling, the bulls will buy it. They will bet it is simply a pullback in the 2019 bull trend.
Traders are waiting for the reaction to today’s 11 am PST FOMC announcement. They expect the Fed to cut the interest rate. But they don’t know what wording the Fed will use in its statement.
There is usually both a sharp move up and down immediately after the news. Day traders should get flat ahead of the announcement and not trade again for at least 10 minutes afterwards. Furthermore, they should be open to anything. There can be a big trend up or down or a reversal.
Overnight Emini Globex Trading
The Emini is up 1 point in the Globex session. It will probably open within the tight 2 day trading range.While a strong trend up or down is possible before today’s 11 am PST Fed interest rate announcement, it is more likely that the trading range price action will continue until the report. Therefore, day traders will look for reversals after 1 – 2 hour moves up or down.If the morning range is very tight, experienced day traders will scalp with limit orders. They will use relatively wide stops and scale in.This is a losing strategy for most traders. If the Emini is very quiet ahead of the report, most traders should patiently wait for a clear signal or a strong breakout before 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.