E-mini 10-Day Bull Micro Channel And Streak Of 10 Consecutive Bull Bars
Al Brooks | Apr 09, 2021 09:48AM ET
Yesterday was the tenth consecutive bull bar on the daily chart, which is unusual and therefore climactic.
Its low was above Wednesday’s low, so now 10-day bull micro channel. This is also unusual and climactic.
Yesterday was the third leg up in a 10-day tight bull channel. The channel is therefore a parabolic wedge, which is a buy climax pattern.
A streak of bull days, a micro channel, and a parabolic wedge are buy climaxes, and they usually attract profit takers.
Normally, bulls would aggressively buy below low of prior day when there is a bull micro channel.
But the current buy climax is extreme. There is therefore an increased risk of a sharp reversal down at any time, like on Sept. 3 or Oct. 13.
Buy climaxes often last much longer than what might appear reasonable. Traders will continue to buy until there is a strong reversal down.
If series of strong trend bars up or down in first hour, increased chance of big trend day
h2 Overnight E-mini Globex trading on 5-minute chart/h2The E-mini is down 8 points in the Globex sessions. It therefore might open near the bottom of yesterday’s climactic rally into the close.
If so, there will be a Big Up and a Big Down. That creates Big Confusion, which typically results in a trading range. There is therefore an increased chance of a trading range open.
The bulls want today to close above the open, and for today’s low to stay above yesterday’s low. They hope that the streak of bull days and the micro channel continues. However, both have lasted an unusually long time. There is an increased chance that today will trade below yesterday’s low and close below today’s open.
Since the buy climax is so extreme, there is an increased chance of a big bear day today.
What is most likely after a buy climax? Exhausted bulls, minor profit taking, and a trading range.
Today is unlikely to be a big bull day because the buy climax is so extreme.
Today is Friday so weekly support and resistance can be important, especially in the final hour. This week’s low is probably too far below for the E-mini to get there today. However, the bears might try to get the week to close below the midpoint of the week. That would reduce the chance of higher prices next week.
h2 Yesterday’s E-mini setups/h2Here 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. Buyers of both 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).
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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 E-mini.
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