Pre-Open market analysis
The has been in a tight trading range for 5 days just above the 50 day MA. Even though it is likely working down to below 3200, it is oversold at and support.
It therefore should bounce this week to 3450–3500 before resuming down. Tomorrow’s FOMC is a potential catalyst for a big move up or down.
Last week was a High 1 buy signal bar on the weekly chart. I have been saying that this week would probably go above last week’s high and trigger the buy signal. That will probably happen today.
But I also said that last week’s candlestick was a bear bar, which is a weak buy signal bar. Furthermore, it followed an outside down bar at the top of a 3 year bull channel. Also, there were climactic streaks of 7 and 9 consecutive bull days on the daily chart.
This is bad context for the resumption of the bull trend. Traders expect a lower high and a 2nd leg sideways to down.
Overnight Emini Globex trading
The fight today will be over last week’s close.
Will the Emini break far above, increasing the chance of the rally continuing to above 3500 over the next week?
Or, will the Emini stall around last week’s high and form a small double top bear flag on the daily chart?
In either case, traders will probably wait for tomorrow’s FOMC announcement to decide if the rally is ending this week or continuing to 3500.
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. I do not want the lines to be distracting. If they are longer, I make them dotted. But, they have to be visible, so I make the shorter ones solid. 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.
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.