Eminis Show Bear Bar In Tight Trading Range
Al Brooks | Feb 08, 2022 10:44AM ET
– The bears got an inside bar yesterday on the daily chart, making the market more neutral.
– The bulls have a high 1 buy above yesterday’s high. However, the signal bar is a bear bar in tight trading range and a four bar bear micro channel.
– The bears see a breakout pullback short below yesterday’s low, but it is forcing bears to sell at the bottom of a likely pullback for the bulls.
– After the four consecutive bull bars last week, the odds are the Emini will have a rally for a few days testing the high of last week.
– The bears are hopeful they can turn the market back down after a test of last week’s high. This would create a double top or a wedge top (Jan. 26, Feb. 2) and give the bears a reasonable chance at a short setup.
– The market is very close to 50%-50% for both the bulls and the bears. The market is deciding between testing the January lows or the all-time high.
– The Emini on the daily chart is clearly in a trading range, and the price is in the middle of the range from the October 2021 lows to the low of January 2022. The middle of any trading range is a bad area to initiate long or short positions, so it is better for most traders to wait for more clarity.
h2 Emini 5-minute chart and what to expect today/h2– Emini is down 12 points in the overnight Globex session.
– The market will probably have a trading range open and test either the high or low of yesterday.
– The market has already tested yesterday’s low during the early hours of the Globex session, so the market may have to test yesterday’s high as well.
– Traders should expect limit order trading on the open and wait for either a strong breakout with follow-through or wait for a credible stop entry for a swing.
h2 Yesterday’s Emini setups/h2Here 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. Buyers of both the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).
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. These therefore are swing entries.
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It is important to understand that most swing setups do not lead to swing trades. As soon as traders are disappointed, many exit. Those who exit prefer to get out with a small profit (scalp), but often have to exit with a small loss.
If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.
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