Emini had outside down reversal from the 2017 close
I will update again at the end of the day
Pre-Open market analysis
The Emini reversed down on the open on Friday from a breakout above the top of the 3 week range. In addition, it failed to hold above the 2017 close. Both are resistance levels.
Yesterday was an outside down bar in a tight trading range on the daily chart. In addition, it had a big tail below. Hence, it is a weak sell signal bar for today. The bears want a reversal down from a failed breakout above the 3 week trading range.
However, the bar on the weekly chart was a bull bar that closed near its high. This is good for the bulls. Furthermore, the rally from the April 2 low is still intact, although the bull channel is weak. This is true despite the lack of consecutive big bull bars on the daily chart.
Therefore, the Emini has still not yet decided between a breakout and a reversal. Because the Emini is at important resistance, there is an increased chance of a trend up or down starting this week.
Overnight Emini Globex trading
The Emini is up 16 points in the Globex session. Because Friday was a big day and today will open in its middle, there is an increased chance of an inside day today.
Yesterday’s high and low are magnets, but both are far away. In addition, the Emini has been sideways for 4 days. Therefore, traders will look for reversals, betting on an inside day and a 5th sideways day.
The Emini is spending a lot of time at the top of the 3 week trading range. The odds favor either a breakout or a reversal this week. Either one will probably result in at least a couple consecutive trend days. Until there is a clear trend, traders will continue to look for reversals every 2 – 3 hours.
Friday’s setups
Here are several reasonable stop entry setups from Friday. I sometimes also show limit order entries and entries on the close of bars.
EURUSD weak breakout of small bull flag
The EURUSD daily Forex chart broke above Friday’s high. Thursday was a 1 day pullback from a 4 day rally. Since the chart is in the middle of a triangle, it is in breakout mode.
The EURUSD daily Forex chart resumed up overnight after last week’s 4 day rally. The momentum favors a test of last week’s high. Yet, it is not yet strong enough for traders to believe that the weekly bull trend is resuming.
While the probability still is slightly greater for a bull breakout of the 3 month triangle, until there is a breakout, there is no breakout. Furthermore, the 1st breakout of a triangle has a 50% chance of reversing.
The bulls want to see consecutive big bull bars breaking above the March 27 high. However, the bears want a strong break below the April 6 low. Until one side wins, traders will continue to hold onto trades for only a few days.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been in a 20 pip range for 5 hours. Most day traders will wait for the range to become 30 pips before trading again. The bulls had a 40 pip rally early in the European session. Yet, the market went sideways since.
Last week’s momentum up was strong enough so that the bulls will probably test last week’s high around 1.24 today or tomorrow. But, that is only 27 pips above the overnight high and therefore not much of a goal.
If the bulls break above that high today or tomorrow, they then will try to break above the March 27 major lower high of 1.2476. However, if the rally fails just above 1.24, the bears will have a 2 week wedge lower high that began on April 2.
Consequently, while the moves have been getting very small over the past 3 weeks, the odds favor an attempt at a breakout of the 3 month triangle within 2 weeks. Day traders will be ready either for a 200+ pip rally to the February 16 top of the range, or a 200 pip selloff to below the April 6 low.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
The Emini had a trending trading range today. It therefore was in a weak bull trend. It closed slightly above the top of the 4 week trading range.
The Emini broke above the 4 week trading range today. Yet, the rally was weak and the breakout was small. The bulls therefore need follow-through buying this week. That can come from 1 or 2 big bull bars or 3 – 4 small bull bars.
Since the bears always want the opposite, they will try to create a reversal down. Today closed around the midpoint and therefore was a reversal day. However, they need either a strong sell signal or 3 or more small bear bars. Without either, any reversal down will probably be minor.
See the weekly update for a discussion of the price action on the weekly candlestick chart and for what to expect going into next week.
Traders can see the end of the day bar-by-bar price action report by signing up for free at BrooksPriceAction.com. I talk about the detailed S&P Emini futures price action real-time throughout the day in the BrooksPriceAction.com trading room. We offer a 2 day free trial.
When I mention time, it is USA Pacific Standard Time (the Emini day session opens at 6:30 am PST, and closes at 1:15 pm PST). You can read background information on the intraday market reports on the Intraday Market Update page.
