The Emini S&P 500 sold off again yesterday to below the 3000 Big Round Number. But Wednesday had a bull body on the daily chart. It was therefore a weak sell signal bar. That increases the chance that there might be more buyers than sellers below its low. We will find out today.
Although the Emini will open with a big gap down, the odds are against a big bear day today. It will open around the open of the week on the Globex chart. This week is now a big doji inside bar on the weekly chart. The open might be a magnet today. If so, today might be a trading range day that oscillates around the open of the week.
Also, the overnight low is near last week’s low. The Emini rallied strongly from that low last Friday. It is therefore support. There will probably be enough buyers around that low again to prevent a big bear day.
Importance Of Friday’s Close
Today is Friday. The week is so far an inside bar on the weekly chart. It is therefore a Low 1 sell signal bar. It would be more bearish if it closes on its low and has a bear body. Therefore the bears will try to get the week to close on the low. That would increase the chance of lower prices next week.
If the bulls create a big bull trend day today, traders would see today as forming a double bottom with last week’s low on the daily chart. That would increase the chance of a reversal up again next week. The bulls might then be able to prolong the trading range. But the odds still favor a 2nd leg down whether or not the bulls can get a reversal up for another week or two.
Overnight Emini Globex Trading
The Emini is down 90 points in the Globex session. A big gap down only has a 20% chance of a big bear trend from the open. If today is to continue down to below last week’s low today, the bears will probably want to sell closer to the average price. Consequently, there is an increased chance of a trading range open for the 1st hour or two. Once the Emini gets closer to the EMA, the bears will look to sell a double top or a wedge rally.
The Emini is opening near last week’s low. It rallied strongly last Friday from this level. Therefore, there is an increased chance that the bulls will buy aggressively again early today. Traders will watch for a possible strong early rally. If there is one, today could be Bull Trend From The Open type of day. Today might then form a double bottom with last week’s low. If so, it could postpone the break to lower prices for a few weeks.
Emini S&P 500
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.