Emini Parabolic Wedge Buy Climax Above 3000

Yesterday sold off on the 1st bar after gapping up to a new all-time high. But, the bear channel on the 5-minute chart was not strong. In the middle of the day, the bulls got a reversal back up to the middle of yesterday’s range.

Since yesterday had a bear body on the daily chart, it is a sell signal bar for today. Over the past month, the daily chart has had 4 legs up in a tight bull channel. That is a parabolic wedge buy climax. Now the bears finally have a sell signal bar.

But the bar had a prominent tail below and the last 5 days have been strong. The chart will likely have to go sideways and form a micro double top before the bears can begin a 1 – 3 week pullback.

Today might trade below yesterday’s low, which would trigger the daily sell signal. Traders want to know if the bulls will finally take profits. More likely, the Emini will go sideways for a few days before deciding whether the bears will finally get a small pullback.

The weekly chart has a 7 bar bull micro channel. While the odds favor a pullback beginning within 2 weeks, it will probably only last 1 – 3 weeks.

The Emini is up 1 point in the Globex session. Yesterday’s high was also its open. That open was therefore not tested and it is now a magnet for today or tomorrow.

Yesterday’s low was a 5-bar tight trading range with 4 bars having identical lows. That ledge bottom, too, is a magnet.

Traders want to test both yesterday’s high and low at some point this week. Also, yesterday’s dominant bear bar on the open might continue its domination for another day or two. There is therefore an increased chance of a test below yesterday’s low.

With magnets above and below, the Emini will probably be sideways again today and maybe tomorrow. However, there is still no strong top on the daily chart. Traders continue to expect at least slightly higher prices.

Finally, it is important to remember that bull trends on the daily chart have an increased chance of rallies in the final hour.

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

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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.

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Written By: Al Brooks