Pre-Open market analysis
Yesterday was a big outside down day after Monday’s big bear breakout. The bears want a break below the May 29 higher low, and then a breakout below the 5 month trading range. The bulls 1st want to stop the selling. They want a double bottom with Monday’s low. If the bears get a breakout, the bulls then want a higher low in the broad bull channel that began on April 2.
Tuesday’s reversal up and yesterday’s early rally represent strong bulls. That creates confusion after Monday’s big selloff. Confusion is a hallmark of a trading range. Furthermore, the is back in May’s trading range. Finally, the 4th of July week is usually the 2nd quietest week of the year. Consequently, the Emini will probably go sideways for a few days.
The bears want follow-through selling, including a strong break below Monday’s low. But, today was climactic. Therefore, there is a 75% chance of at least 2 hours of sideways to up trading that begins by the end of the 2nd hour today.
Overnight Emini Globex trading
The Emini is down 9 points in the Globex market. It is testing the 2700 Big Round Number. The next support is the May 29 low of 2678.75 and last year’s close of 2684.75. Since a leg in a trading range usually tests major support before reversing, the Emini will probably continue down at least another 20 points within a week.
Since yesterday was so climactic, there is only a 25% chance of another big bear trend today. More likely, the bear channel that began with the pullback to around 2722 will evolve into a trading range today. There is a 50% chance of follow-through selling in the 1st hour or two before there is a swing up.
Emini 5 Min Chart
Here are several reasonable stop entry setups from yesterday. I sometimes also show limit order entries and entries on the close of bars. 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 in a position at the moment, these entries would be logical times for him to enter.
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