Thursday, October 6, 2022

E-mini Has 60 Minute Final Bull Flag Just Below 3500


The formed a bear bar on the daily chart yesterday, but it closed in the middle of the day’s range, like most of the days over the past 2 weeks. The bears want follow-through selling today, while the bulls want a reversal up.

The E-mini might have to reach the Nov. 6 low within the next few days. On the 60-minute chart, that is the bottom of a 2-day tight trading range. It is therefore a reasonable candidate for a Final Bull Flag on the 60-minute chart. That makes it an important magnet below. If the E-mini gets there, traders will look for at least a day or two bounce.

The bulls want today to reverse up from a micro double bottom with Tuesday’s low. Despite the bear body yesterday, there was a big tail below the bar, representing late buying. This was a 2nd reversal up from a test of the October 12 high. That was the breakout point for last week’s rally. The bulls hope that the bull trend will resume today after yesterday’s test. However, the bear body and Monday’s selloff make more sideways to down likely before the bulls get a new high.

Traders are deciding if this week will be the high of the year or just a pullback in a strong bull trend. At the moment, the bull case is slightly more likely. However, a couple big bear days could shift the probability in favor of the bears.

Weekly support and resistance

Today is the final day of the week. Therefore weekly support and resistance can be important, especially in the final hour.

The bears want the week to close on the low of the week. That would be below last week’s high and the September all-time high. It would increase the chance of at least slightly lower prices next week.

The bulls want the week to close above the Oct. 12 high, which was the breakout point for last week’s rally. They want this selloff to be simply a pullback to test that breakout point.

Overnight E-mini Globex trading

The E-mini is up 25 points in the Globex session. It will therefore open near the top of its 3-day trading range and back above the 20-bar EMA on the 60-minute chart.

Markets tend to continue to do what they have been doing. Most of the trading has been sideways for 3 days. Day traders expect more today, especially since yesterday is a weak buy signal bar on the daily chart. Also, 9 of the past 11 days closed either in the middle of the day’s range or near the open of the day. It is reasonable to assume that today will follow that pattern.

A trend day can come at any time. If there is a series of strong trend bars early in the day in either direction, traders will look for a trend. Without that, they will continue to look for reversals.

However, even if today is again mostly sideways, the average daily range has been big. Day traders have had swing trades every day, despite lots of sideways trading.

Remember, today is Friday so weekly magnets can be important, especially in the final hour. The most important ones are last week’s high, the Oct. 12 high, and the midpoint of the week’s range.

Yesterday’s Setups

E-mini 5 Min

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.

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