Posted 7:24 a.m.
The Emini ended yesterday in a bull trend and it had consecutive bull bars on today’s open, reaffirming the trend. However, the initial rally lacked big bull bars and strong follow-through. This means that it is not yet likely that this will be a trend from the open bull trend day.
The triangle that formed at 7:15 could be the final bull flag, and it could then be followed by a swing down. However, unless there is a strong sell signal bar or a strong bear breakout, the bulls are still in control and it is still a bull trend day, although not yet strong. It is near the top of the channel of the past 2 weeks and might reverse if it gets there. Currently, the trend channel line is around 2044.
The Emini has had many quiet trading range days over the past 2 weeks. Day traders have been consistently able to scalp shorts profitably above prior highs. This is a sign that the market might be transitioning from a strong bull trend into a trading range, and this increases the chances of at least a small (10 – 40 point) pullback happening soon.
Today had another open with a lot of trading range price action. Day traders will initially look to scalp. Once there is a strong breakout up or down with follow-through, day traders will look for a swing trade of at least 4 points.
Day trading outlook for tomorrow’s Emini price action: trading range day today, but it is a possible start of a pullback
The Emini had trading range day today, but it is a possible start of a pullback. The Emini opened with a weak rally that reversed down just below the top of the 60 minute bull channel and it then quickly fell to the bottom of the channel. It reversed up from a wedge bottom and closed near the open of the day, creating a doji day.
The daily Emini has been losing momentum and is trying to continue up after a pullback in a 14 day bull microchannel. The odds are that it will go sideways to down for about 10 days, and a reasonable target is the November 4 low, which tested the October 30 high and the gap above it.
Day traders have been able to make profitable shorts on most days over the past week. When that happens in a bull trend, the odds are increasing that the bears will soon be strong enough to transform the bull channel into a trading range. That is probably what is happening. Bears will look to sell rallies and bulls will become quicker to take profits. Also, the bulls will become increasingly unwilling to buy at the highs and they will start to look to only buy pullbacks. The result is that the Emini will probably have to pull back over the next 10 days.
Today late rally might have formed a double top with the top of the wedge bottom. Rallies after spike and channel bear trends usually try to test the top of the channel, which this rally did. The bears hope for the double top and then the breakout below the neckline, which is today’s low. The then want at least a measured move down. The bulls want the channel up to continue. I believe that the odds are beginning to favor a pullback and that traders will be more interested in selling strength than in buying strength. Bulls will begin to only buy pullbacks.
The Emini is still in a bull trend on all higher time frames and it therefore might quickly reverse today’s 5 minute bear trend reversal. However, the bulls need a strong breakout with follow-through. Otherwise, the 5 minute bears will get the breakout below today’s low and then a measured move down.
Tomorrow is a Friday so weekly targets are important. The bodies on the three past weekly candles have been shrinking, so this week will probably not have bull body as big as last week’s small bull body. It will have a bear body if tomorrow closes below the 2028.25 open of the week. The bears want both a bear body and a close below last week’s close of 2026. That would make this week’s candle a bear reversal bar. However, after 4 strong weeks up, the best the bears will probably get is sideways for a few weeks. The bulls want a bull body and a close above last week’s high of 2030.75. This would create another all-time high weekly close.
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.
