{"id":97902,"date":"2020-03-16T06:20:00","date_gmt":"2020-03-16T13:20:00","guid":{"rendered":"https:\/\/www.brookstradingcourse.com\/?p=97902"},"modified":"2020-03-16T14:07:39","modified_gmt":"2020-03-16T21:07:39","slug":"emini-parabolic-wedge-sell-climax-december-2018-low","status":"publish","type":"post","link":"https:\/\/www.brookstradingcourse.com\/es\/analysis\/market-update\/emini-parabolic-wedge-sell-climax-december-2018-low\/","title":{"rendered":"Emini parabolic wedge sell climax near December 2018 low but locked limit down"},"content":{"rendered":"\n
Emini and Forex Trading Update: Monday March 16, 2020<\/h2>\n\n\n\n
I will update again at the end of the day.<\/p>\n\n\n\n
Pre-Open market analysis<\/h2>\n\n\n\n
The Emini collapsed in March. Since the selloff had 3 legs down, it is a parabolic wedge. That usually attracts some profit taking. This is especially true when the climax is extreme and near support. Traders see the selloff as a test of the bottom of the 2 year trading range. That is the December 2018 low.<\/p>\n\n\n\n
Friday sold off and then reversed up strongly. The context on the daily chart is good for the bulls. If today is a big bull day, then the 1 – 2 week short covering rally would have likely begun. If so, everything will probably go up for the next week or so. <\/p>\n\n\n\n
But it is important to note that the daily chart is in a strong bear trend. When there are big surprises in a strong trend, they usually come in the direction of the trend. Consequently, despite a parabolic wedge bottom at support, the Emini could collapse further today and over the next week. <\/p>\n\n\n\n
It has been crashing for 4 weeks, but not quite enough to be called a crash. If it hits the 13% or 20% locked limit down levels today, traders will call it a crash. It would then be comparable to 1987 and 1929.<\/p>\n\n\n\n
Limit down in the Globex session<\/h3>\n\n\n\n
The Emini traded down 5% in the Globex market and it has stayed there. That means it is locked limit down. Traders are deciding if the overnight selloff is a pullback from Friday’s late rally or if that rally has failed. Will Friday’s rally just be a bull trap in a strong bear trend? Or, will today’s limit down open reverse up quickly and be a bear trap in a new 2 week rally? <\/p>\n\n\n\n
Remember, even if today reverses back up strongly, traders should expect the final low to be many months from now. It might even come in a year. This is not January 2019. This looks like 1987 or worse. If a V bottom begins, there is only a 20 – 30% chance that it will be the end of the bear trend. <\/p>\n\n\n\n
When there were only 100 Americans infected with the coronavirus a few weeks ago, I said that 40 – 70% of America could get infected. America’s behavior tells me that people are coming to that conclusion. <\/p>\n\n\n\n
Very few of us were around during WWII or the Great Depression, and none of us lived through the 1919 pandemic. Those are the last times when there was such a widespread, prolonged change in the behavior of America. This change has probably already created a recession. Traders are deciding how bad things will get. If today sells off strongly, then a 40 – 50% selloff will be more likely than not.<\/p>\n\n\n\n
Overnight Emini Globex trading <\/h3>\n\n\n\n
The Emini is locked limit down. It will probably stay limit down until the day session opens. There might be enough panic selling to quickly drive it down to -7%. That is the 1st day session limit. <\/p>\n\n\n\n
I mentioned that there are additional trading halts at -13% and -20%. If it hits either, this will be called a crash. Crashes are rare. There were only 2 in the last century. I was trading during the 1987 Crash. The extreme change of behavior in our people is enough to turn this into a crash. <\/p>\n\n\n\n
It probably will not happen, but this is the environment that can create a crash. Traders should only consider buying if there is a very strong rally. Let’s hope that this is a bear trap and the start of a 2 week rally. <\/p>\n\n\n\n
Even if it is, the mood of our country is so bleak and deep-seated that traders have to expect even a strong rally to fail. We are going lower. I have mentioned 40 – 50% as reasonable targets many times over the past 2 years. If today sells off, this bear trend will reach those targets quickly.<\/p>\n\n\n\n
Friday’s setups<\/h2>\n\n\n\n\n\n
Here are several reasonable stop entry setups from Friday. 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. Buyers of the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day.<\/p>\n\n\n\n
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.<\/p>\n\n\n\n
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.<\/p>\n\n\n\n
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