Impending Obamacare Affordable Health Act repeal causing S&P rally
Updated 6:41 a.m.
The Emini opened in the middle of yesterday, which was a trading range day. The selloff down to yesterday’s low was strong. Therefore, the Emini might have to test that low again before the bulls will buy again. If it does test that low, it will also test the 60 minute moving average. A reversal up there would create a 2 day double bottom bull flag.
Today’s early trading range price action increases the chances that yesterday’s trading range is continuing. Hence, it increases the chances of a test down to the 60 minute moving average. Furthermore, it increases the chances that today will be another trading range day. While the bulls want the month to close above its open tomorrow, this so far does not look like a resumption of Monday and Tuesday’s rally.
The bears want a double top with last week’s lower high, there is no sign of a strong reversal down. The odds are that today will be a continuation of yesterday’s trading range.
Pre-Open market analysis
Yesterday was a trading range day after 2 big bull trend days. While the odds favor follow-through buying from the big reversal up from the 50 day moving average, the Emini is still likely in a correction.
Because the weekly chart’s high is far above the weekly moving average, the odds are that the Emini will test that average. Hence, the current rally will probably fail to reach a new high. In addition, the month-long selloff has been in a tight bear channel. Hence, the current rally is probably a minor reversal. It therefore will more likely lead to another leg down instead of a new all-time high.
If the bulls continue to create consecutive bull bars, traders will assume that the correction is over and that the bull trend is resuming. The bulls have not done enough yet.
Friday is the last day of the month. The bulls are trying to convert what was a bear reversal bar into a bull bar before the month closes. That means that the open of the month is a magnet. Because it is only 20 points higher, the bulls could get there by tomorrow’s close. Yet, the weekly chart is still likely to correct.
Overnight Emini Globex trading
The Emini is down 2 points in the Globex market. While yesterday was a pause day after a 2 day buy climax, the odds still favor higher prices over the next several days.
This is because last this week’s rally was strong. In addition, it went above the top of the March 23 final major lower high on the 60 minute chart. Hence, the bear trend has evolved into a trading range or bull trend. Furthermore, the breakout above that high was strong. Therefore, the odds favor at least another leg up after the pause ends.
Yet, the 5% correction down to the December close has probably begun. Therefore, the current rally is more likely a bull leg in a bear channel than a resumption of the bull trend.
While the bears would like the 3 day rally to form a double top bear flag with the March 23 lower high, that is unlikely. This is because the rally went above that high. In addition, the rally was very strong.
EURUSD Forex market trading strategies
The EURUSD 240 minute Forex chart has fallen sharply after a wedge top. Yet it is near the support created by the bottom of the March 16 pullback and the top of the February trading range.
The EURUSD Forex market reversed down from a wedge top on the 240 minute chart this week. This was a failed breakout above a head and shoulders bottom on the daily chart. While the reversal down has been strong, is will probably find support around the March 16 low.
This is because that is the bottom of the wedge. A reversal from a wedge top usually has 2 legs sideways to down. When it reaches the bottom of the wedge, it usually bounces. In addition, it then typically has a 2nd leg sideways to down and then enters a trading range.
Hence, the odds are that the selloff will end today or tomorrow. Furthermore, the EURUSD market will probably then rally for a couple of days. The bears will then likely sell again and create a 2nd leg down.
Overnight EURUSD Forex trading
While the EURUSD Forex market continued to sell off last night, it has had increasing trading range trading for a couple of days. The bears are beginning to take profits near support. Furthermore, the bulls are beginning to buy, expecting a 100 pip rally over the next few days. Yet there is no clear bottom yet. In addition, the support is still around 1.0700. Therefore, the EURUSD will probably fall another 30 – 50 pips before the bear rally begins.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
After a parabolic wedge rally on the open, the Emini evolved into a trading range day.
The Emini resumed its rally today after yesterday’s trading range. Because the rally has been climactic, the odds favor a pullback before testing the March 16 sell climax high. Since today’s high is only 12 points below the open of the month, the bulls might try to get there before the month ends at the end of the day.
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.
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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.
