E-mini: 8 Consecutive Bear Days, In Tight Trading Range

 | May 06, 2021 09:39AM ET

h2 Pre-open market analysis of daily chart

Yesterday showed 8 consecutive bear days on the daily chart. That happens only once every few years, and it is therefore climactic. Since it is sideways instead of down, it is not a sell climax. It is simply a pattern that has lasted a long time and is likely to end. Therefore, either today or tomorrow will probably have at least a small bull body on daily chart.

The bear bodies are a sign of repeated profit taking, but there haven't been enough to create a reversal down.

E-mini has been in at tight trading range for 4 weeks, so it's now in Breakout Mode.

Since we're in a bull trend, higher prices are always at least slightly more likely than a strong reversal down. However, the year long rally has been extreme, so traders should expect a 10% correction this summer.

On 60-minute chart, the 4-week trading range is a head and shoulders top. But a major top only has a 40% chance of leading to a bear trend; sideways or up are slightly more likely.

h2 Overnight E-mini Globex trading on 5-minute chart/h2
  • E-mini was down 1 point in the Globex session, so it'll probably open within yesterday’s range.
  • If it gaps down, that gap will be small, and small gaps usually close in the 1st hour.
  • The trading range for the last 4 weeks has had at least one swing up and one swing down. Day traders will expect reversals again today.
  • If there is a series of strong trend bars in the 1st hour, then we may wind up with a strong trend day, though a trading range day is more likely.
h2 Yesterday’s E-mini setups/h2