Today was an FOMC report day, but the server for the site was down today and I did not post a comment after the first hour. If I did, it would have been what I wrote yesterday, that the Emini was likely to trade down for a couple of hours after yesterday’s parabolic wedge rally and today’s brief follow-through buying. Also, the Emini was likely to have a big move after the FOMC report, but the first move usually reverses. Traders should not look to enter until after at least the 2nd bar after the report.
Day trading outlook for tomorrow’s Emini price action: overbought on the daily chart
As expected, after the early follow-through buying from yesterday’s buy climax, the Emini sold off for at least 20 bars. It then went mostly sideways after the FOMC report, but rallied back to the middle of the range by the end of the day.
Friday is the last day of the month and therefore tomorrow and Friday will affect the appearance of the monthly chart. The daily chart is overbought since it has had 10 days without a pullback (a 10 bar bull micro channel).
If tomorrow gaps down, the there would be a 2 day island top. The target would be the gap around 1900, which is also the August low. Since the September high is only about 35 points higher, it is possible that the Emini rallies to above that all-time high by the time Friday closes. This would create an outside up bar on the monthly chart. Since the monthly chart is so overbought, that bar would more likely be a sign of exhaustion than the start of a new leg up.
A 10 day bull microchannel on the daily chart means that the buying pressure is strong. This increases the chances that the first reversal down will be bought, even if the Emini gaps down tomorrow. The Emini is at the top of a 4 – 12 month trading range, and unless it breaks above the September high, the odds are that it will soon reverse back down to the middle of the range, around 1900 and the August low.
Premarket price action analysis
See yesterday’s intraday market update report for today’s premarket analysis. Once there, scroll down to the heading, Day trading outlook for tomorrow’s Emini price action.
See the weekly update for a discussion of the weekly 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 Emini price action real-time throughout the day in the BrooksPriceAction.com trading room, and a 2 day free trial is available.
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.
