FuturesBlog.com – Emini and Futures Market Analysis by Chuck Kowalski

Emini Trading Analysis for Feb 8

Posted on February 8, 2010 by Chuck Kowalski

Monday was a lackluster day after the violent trading from Friday.  The market still looks weak and I have my doubts the low on Friday will hold.  There were a couple good setups that I look for when I trade and I pointed them out on the chart.

Notice how there are several good double top setups.  A double top setup is when two or more consecutive 5-minute bars have the same high price.  A trade signal is generated on a break below the first on previous bar’s low.  These trades usually work well, especially when the market reaches an overbought level. 

I also want to point out the first “failure” I have labeled on the chart.  This move poked 1 tick above a triple top and reversed lower.  When a market fails to breakout and then reverses quickly – it often sets up a prolonged move lower.  They usually happen as the market is trying to claw its way back to the highs and the door gets slammed shut. 

The last example circled is a failure outside reversal bar.  This type of reversal bar would often lead to a nice move higher, especially if it came on heavy volume.  However, this one failed quickly and it was a quick profit on the short side as the low was broken.