Yesterday was the 5th day in the rally from the double bottom on the daily chart. The stalled at the bear trend line from the September and October highs. If it turns down from here, there will be a triangle on the daily chart. However, since it is already in a trading range, it is already in Breakout Mode.
With the 5-day strong rally, the odds favor higher prices. But today was the 6th consecutive day that closed near the midpoint of the day’s range. That is a sign of some hesitation.
Also, after a strong rally on the daily chart, many bulls will take some profits soon. This could result in a bear day at any point. However, the rally is strong enough so that traders will buy the 1st 1 to 3-day selloff.
The rally should continue up to the Oct. 12 lower high. It could even continue to above the September all-time high within a week or so.
Today is the last day of the week, so weekly support and resistance can be important, especially in the final hour. The most important magnets are last month’s high, which about 20 points above yesterday’s high, and last week’s high of 3430, which might be too far below to reach today.
Overnight E-mini Globex Trading
The E-mini is down 15 points in the Globex session. After an extreme rally this week, there is an increased chance of some profit-taking today. That could result in either a trading range or a bear trend day.
Yesterday was a trading range day. It had a clear double top and a clear double bottom. Because the daily chart is so overbought and at resistance, if there is a break above the double top, there would be an increased chance of a reversal back down.
But if there is a bear breakout of yesterday’s range, there is an increased chance that the profit-taking could last all day. That means if today is going to be a trend day, down is slightly more likely.
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.