Pre-Open Market Analysis
The Emini yesterday traded below last week’s low, which triggered a minor weekly sell signal. It is oversold on the daily and 60 minute charts and probably will bounce today or tomorrow. However, traders expect a 2nd leg down to around the bottom of the 9 consecutive bull bars, which is around 3200. The selloff might reach 3000.
It is important to note that the 5 month reversal up from the March sell climax was strong. Traders will even buy a 10-20% selloff. Therefore, the current reversal down will probably be minor on the daily and weekly charts.
Traders do not expect the selloff to go straight down and back up. More likely, the Emini will be sideways to down for several weeks before the bulls will buy. It could remain in a trading range up to the election.
Overnight Emini Globex Trading
The Emini has rallied overnight and it is up 30 points in the Globex session. It will therefore probably open near yesterday’s high.
Even though yesterday sold off late, it was still mostly a trading range day. That means that the bears lost some momentum. This is coming at the support of the February high. Also, the bears have big profits. Many will begin to buy back some of the shorts.
Additionally, bull traders are looking to buy for a 1-3 day bounce. These factors increase the chance of a rally for at least a day or two. and it will probably begin today or tomorrow.
Can the Emini continue straight down to below the August low, close the gap on the monthly chart, and test the 50 day MA?
Yes, but because it is oversold and stalling at support, day traders will expect a rally to begin this week.
Since yesterday was a trading range day, there is an increased chance of more trading range price action. However, there is also an increased chance of a short-covering rally in an oversold market at support.
Emini Trading Range With Late Bear Breakout
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. I do not want the lines to be distracting. If they are longer, I make them dotted. But, they have to be visible, so I make the shorter ones solid. 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 (see Online Course/BTC Daily Setups).
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.