E-mini At Bull Trend Line And Has 4 Bear Bars
Al Brooks | Sep 15, 2021 09:31AM ET
E-mini at bull trend line with yesterday the fourth consecutive big bear bar in the 2-week selloff. That is unusual, and it therefore today should form a bull bar.
The E-mini will probably soon stop going down and begin to go sideways into next Wednesday’s FOMC announcement. That means it should soon go sideways to up for a few days.
It is just above the 50-day MA and it might have to fall a little further first. It could also test the Aug. 19 higher low.
Most recent days had early selloffs. If there is an early selloff today, there will probably be a reversal back up and close above the open.
The E-mini closed below the daily bull channel again yesterday. Traders are deciding if the E-mini will finally break far below the channel and evolve into a trading range. A second consecutive close below the channel would increase the chance of lower prices over the next few days.
The E-mini should begin a 15% correction in September or October. It might have already begun.
There is a small chance of a collapse far below the bull trend line over the next 2 weeks. Next week’s FOMC report could be the catalyst.
While trends resist change, there are factors that I have discussed in the weekend blogs that are increasing the chance of the bull trend on the daily chart reversing down for a couple months.
There is now a 50% chance that the Sept. 2 high will remain the high for the rest of the year.
The Sept. 2 high was just slightly above the measured move based on the height of the pandemic crash.
Because of the unusual streak of bull bars on the monthly chart, there should be a couple consecutive bear bars starting this month or next.
That should result in at least a 15% correction before the end of the year.
The E-mini should fall 15% before rallying 15%.
h2 E-mini 5-minute chart and what to expect today/h2E-mini is up 5 points in the overnight Globex session.
Yesterday sold off in a Spike and Channel Bear Trend. There is therefore a 75% chance of a couple hours of sideways to up trading that begins by the end of the second hour.
The channel typically ends up being a bear leg in what will become a trading range. That channel is 30 points tall.
If today rallies, it could take hours to get back to the start of the channel, just above 4450 and around the 60-minute EMA.
There is a 25% chance of a strong break below yesterday’s wedge bottom and then a 30-point measured move down.
The E-mini has sold off relentlessly to the bottom of the daily and weekly channels. Also, it is just above the 50-day MA, which has been reliable support for over a year.
The E-mini will probably bounce for several days starting today or tomorrow. It might test the 4500 Big Round Number before the FOMC meeting.
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A bear trend should begin within a month. It might have already started. That increases the chance of a surprisingly big bear day in an oversold market.
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. 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).
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. These therefore are swing entries.
It is important to understand that most swing setups do not lead to swing trades. As soon as traders are disappointed, many exit. Those who exit prefer to get out with a small profit (scalp), but often have to exit with a small loss.
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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