Emini S&P 500 Deciding Between All-Time High And February 11 Gap

Yesterday's Emini S&P 500 gapped down, but reversed up in a weak rally on the open. It spent most of the day going sideways to down in a weak bear channel. However, it rallied into the closed. Today was the 5th consecutive bull trend bar on the daily chart.

This is a sign that the correction might have ended. It increases the chance of a strong bull trend day at some point this week and a new high within a few weeks. However, the odds are still slightly higher for a 2nd leg down to close the gap above the February 8 high.

Today will probably have at least one swing up and one swing down, like most recent days. Despite 10 bull bars in the past 12 days, today will probably not be a strong bull trend day.

The chart is in the middle of a 2-week trading range. Traders are deciding if the selloff has ended or if it will continue down to fill the gap above the February 8 high.

On the 240-minute chart, there is a head and shoulders bottom. Every head-and-shoulders bottom also is a double top bear flag. The chart is in Breakout Mode.

When that is the case, there is an increased chance of a big trend day up or down. However, the chart might continue to form another small trading range day or two before the breakout comes.

The Emini is up 14 points in the Globex session. It therefore might gap above yesterday’s high on the open.

Despite 5 consecutive bull bars on the daily chart, the buy setup on the daily chart is not strong. Yesterday was only a bull doji bar. It is therefore a weak buy signal bar. Consequently, there might be more sellers than buyers above yesterday’s high.

Also, when a chart is in a trading range on the daily chart, 5 consecutive bull bars is unusual. Therefore, if today is another trading range day, the odds are that today will close below its open. If the Emini is above the open in the final hour, day traders will look for a reversal down for a close below the open.

al

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 have access to a much more detailed explanation of the swing trades for each day.

Get The News You Want

Read market moving news with a personalized feed of stocks you care about.

Get The App

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.

/h2

Written By: Al Brooks