Emini Bears Want Outside Down Candle Stick On Weekly Chart
Al Brooks | May 23, 2018 09:18AM ET
Yesterday S&P Emini Futures reversed down from a breakout above last week’s high. It sold off strongly at the end of the day and formed an outside down day. Since last week was small, the Emini might trade below last week’s low this week. This would create an outside down week. Because the momentum down at the end of yesterday was strong and last week’s range was small, the odds are that this week will go outside down.
If this week is a big bear bar on the weekly chart, and it closes on its low and far below last week’s low, it would be a sign of strong bears. It would therefore increase the chance of a test of the February low. More likely, this week will not close far below last week’s low. If that is the case, the odds will still favor a gradual rally up to the all-time high.
Overnight Emini Globex trading:
The Emini is down 17 points in the Globex session. It is therefore now only 9 points above last week’s low. The odds are that it will trade below last week’s low at some point this week. This week would then be an outside down week.
Last week’s low of 2700.50 is at the 2700 Big Round Number. This is support. Additionally, it is still around the support of the April 18 high of 2718. However, a strong break below last week’s low would trigger a small double top.
That breakout could lead to a quick 40 point measured move down. While this increases the odds of a big bear trend day, a test of support also increases the chance of a bull reversal. However, since most of the trading over the past 2 weeks has been in trading ranges on the 5 minute chart, that will likely be the case again today.
Today will open with a big gap down. That increases the chance of a trend day, and a bear trend is more likely. However, there is only a 20% chance of a big trend up or down on the open. Instead, there is usually a 3 – 10 bar move up or down and then a trading range for the 1st 1 – 2 hours. Once the chart gets close to the EMA, traders will look for either a reversal down into a bear trend or a break above and a bull trend.
Yesterday’s setups
Here are several reasonable stop entry setups from yesterday. I sometimes also show limit order entries and entries on the close of bars.
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