Yesterday was a strong bull trend day on the 5 minute chart. Furthermore, it was the 3rd consecutive close above the September trading range high. Traders expect a test of the all-time high. Bulls will therefore buy the 1st 1 to 2-day reversal down.
Yesterday was an extreme buy climax day on the 5-minute chart. The day after an exhaustive buy climax typically has at least a couple hours of sideways to down trading that starts by the end of the 2nd hour.
There is a 50% chance of some follow-through buying in the 1st hour. Can today rally strongly to a new all-time high? While that is possible, the 3 day rally has been extreme. There will probably be at least a one day pullback before there is a new high.
Overnight E-mini Globex Trading
The E-mini is down 5 points in the Globex session. After yesterday’s big rally and 4 days of strong rallying, the bulls will be inclined to take some profits today. Therefore, today will probably not be a big bull day. If there is an early rally for a couple hours, it will attract profit-taking. Traders will look for a reversal down.
Traders expect a trading range. Therefore, they will look for reversals, even if there is a strong trend up or down for 2–3 hours. They will swing trade the trend, but know that a reversal will be more likely than today continuing all day as a trend in either direction.
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.