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This means that although there will still be a swing trade or two every day, the swing trade will probably be limited and the high probability trading is to bet on a lot of trading range price action. However, since the Emini is within both a weak bull channel and a trading range on the daily charts, most of the trading has been within trading ranges every day. With the S&P Emini futures contract just below its all-time high, the intraday trading strategy is to be ready for either a strong breakout up or a strong reversal down. It lacks big consecutive bull trend bars on both the daily and weekly charts, making the breakout a weak price action pattern, and increasing the chances that the breakout will fail.
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Traders learning how to trade the Emini for a living should sense that there is something wrong about the breakout above the 4 month trading range. This makes it unlikely that the weekly candlestick pattern will be a strong breakout bar. In the Globex session, the Emini sold off on this morning’s report. The bears failed yesterday, and that makes it unlikely that the weekly candlestick pattern will be a bear reversal bar today. The nearest targets are last week’s high and this weeks high (the all-time high) and low. Today is Friday so weekly support and resistance are magnets. This means that any leg up or down will probably end up as a leg within a trading range day. Since so much of the price action today has been disappointing and yesterday was in a trading range, the odds of a strong trend up or down today are small. It is Always In long and will try for a test of the all-time high. Until then, limit order traders are trading for 1 point scalps, buying below bars and selling above.Īt the moment, the Emini is breaking above the moving average and to a new high of the day after forming a double bottom bull flag. There is usually a swing trade that begins within the first hour or so, and swing traders wait for a strong breakout in either direction with follow-through. This is a trading range open, and since yesterday was also a trading range, it increases the chances of a lot of trading range price action today.
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The bears wanted an opening reversal down from the moving average. The Emini reversed up from below yesterday’s trading range, but there was no immediate follow-through buying.