Yesterday was a big bear day after a big bull day on Wednesday. Yesterday’s low was above Wednesday’s low.
E-mini bulls want breakout above November all-time high. The bulls hope that yesterday was just a deep pullback from Wednesday’s rally. They want the year to close at a new high.
The bears want yesterday to be the start of a reversal down from a double top with the Nov. 22 high.
Remember, as long as December stays below the November high, the E-mini is still on a Low 2 top sell signal on the monthly chart.
The bull trend on the daily, weekly, and monthly charts make a new high more likely than a reversal down to below the November low. There is enough time remaining in December for the E-mini to pull back a little more and still end the year at a new high.
But if the bears can get a few consecutive big bear days, the odds will favor a test of the December low before there is a new high.
E-mini 5-minute chart and what to expect today
E-mini is down 30+ points in the overnight Globex session. It will gap down.
However, yesterday was a sell climax day. That means there is a 75% chance of at least a couple hours of sideways to up trading beginning by the end of the second hour today.
Today is Friday so weekly support and resistance are important, especially in the final hour.
The bears want a bear bar on the weekly chart. They want it to close near the low of the week, which is unlikely. At a minimum, they want it to close below the midpoint.
The closer to the low of the week that it closes, the less likely the Emini will finish the year at a new high.
The bulls want the week to have a bull body. With the E-mini currently about 70 points below the open of the week, that is unlikely. At a minimum, they want the week to close above its midpoint. That would increase the chance of sideways to up trading next week.
Yesterday’s E-mini setups
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. 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.
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 E-mini.