Emini Trend Resumption Up, But Possible Small Double Top
Al Brooks | May 22, 2018 01:14PM ET
The Emini gapped up yesterday and entered a trading range after a 50% pullback. The odds favor a breakout above last week’s high this week. Because yesterday gapped up and was a small bull day, the odds favor trend resumption up and higher prices today or tomorrow.
The bears want the breakout to fail. But, they will need at least 2 – 3 big bear bars on the 5-minute chart before traders will conclude that today is a bear trend day.
If the bulls get a breakout above the April 18 high, the bears will try for a reversal down. This is because there would then be a wedge rally that began April 18.
There is a 60% chance that this rally will test the all-time high within a couple of months. Since the daily chart is still in a trading range, there is always at least a 40% chance of a lower high and then a break below the February low.
h3 Overnight Emini Globex/h3
The Emini is up 5 points in the Globex session. The bulls hope that yesterday’s gap up was a bull breakout on the 5 minute chart and that yesterday’s trading range was a bull flag. They therefore want trend resumption up today. Therefore, bulls will look for a rally above yesterday’s range in the 1st hour today.
The bears want either a reversal down or at least a continuation of yesterday’s range today. If they get more trading range trading, they will try to create a major trend reversal down.
Since the past 7 days have been trading range days on the 5 minute chart, that is likely again today. Yesterday’s gap up increases the chances of a trend day up or down.
The bulls are trying to break above last week’s high. But, they need more than a breakout. They need a big rally far above it before traders are convinced that the rally up to 2800 is underway.
If the breakout above the 3 month triangle continues to be weak, as it has been for a week, there will be a 50% chance of a reversal down on the daily chart. The lack of a strong breakout on the daily chart increases the chance of a big bear day this week.
h3 Yesterday’s Setups/h3Here 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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