Pre-Open market analysis
Yesterday gapped up to another all-time high and was a strong bull trend day in a bull trend. But, whenever there is a gap up, there is often a gap down. The gap down can be on the next day or several weeks later. That would create an island top. If there is no gap down, there is often a pullback that closes the gap, like after the gaps of August 27 and September 13. Even if yesterday’s gap closes, a gap closure or an island top is only a minor reversal. The odds still favor higher prices.
Since next Wednesday is an FOMC day, the Emini might begin to go sideways. In addition, after a big gap up above major resistance, the Emini usually goes sideways for a few days. Therefore, even though the odds favor higher prices, the bulls might not get much follow-through buying until after the FOMC announcement.
Overnight Emini Globex trading
The Emini is up 1 point in the Globex market. The bulls are hoping that the weak September rally is now strong. They therefore want confirmation of yesterday’s breakout. Their minimum goal is to create a bull body on the daily chart today. That would increase the chance of higher prices next week.
Since yesterday was a buy climax, the bulls are probably exhausted. That increases the likelihood of a trading range day today. If so, there will be a fight in the final hour over whether the close will be above or below the open. In the final hour, the bulls will buy if the Emini is below the open and the bears will sell if it is above. Since yesterday was a strong bull day in a bull trend on the daily and weekly charts, the bulls will probably have a bull close today.
There is a 20% chance of a strong trend day up or down. If the bears get a strong bear trend day, yesterday’s breakout will fail. Their minimum goal is a close below the open. However, they need a reasonable size bear body closing on its low on the daily chart. If they get that today, which is unlikely, today would be a good sell signal bar on the daily chart. More likely, today will either be a trading range day or a weak bull trend day.
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. 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 in a position at the moment, these entries would be logical times for him to enter.