Micro double top buy climax: Updated 6:50 a.m.
The Emini began with an opening reversal down from the 60 minute moving average, a 50% pullback, and a test near the top of yesterday’s bear channel. Furthermore, yesterday’s reversal up was minor and therefore a bear rally. Finally, yesterday had a series of Moving Average Gap bars, which increase the chances of a test back down to yesterday’s low. That test usually creates a Major Trend Reversal buy setup.
While it is possible for a Higher Low Major Trend Reversal to develop within a trading range on the open, it is more likely that there will be at least a test down. Therefore, the odds are that the Emini will test down at some point in the 1st hour or two and form a Major Trend Reversal. It might 1st test above the top of yesterday’s bear channel, but the odds that it will rally from here and form a bull trend day are less than 25%.
However, there is only a 25% chance of a strong bear trend day and a 75% chance that the selloff will be followed by a trading range. At the moment, the Emini is Always In Short and likely to go sideways to down soon. Yet, it still might rally to the top of yesterday’s channel at around 2162 1st. Today will probably have swings up and down. The Emini is currently deciding where the top of the swing down will be.
Emini micro double top at all-time high: Pre-Open Market Analysis
The Emini had a big bear trend day yesterday. I have been saying that because the stops are so far below on the daily chart, the bulls will have to take partial profits. As a result, I said that the Emini will probably pull back 30 – 40 points over then next week or so. Was yesterday the start of the selloff? It is too early to know, but it might be. The bears need follow-through selling today.
Yesterday’s reversal down formed a micro double top on the daily chart. I have said that this was the minimum needed for the pullback to begin. It makes bulls more eager to take profits and bears more willing to sell. However, unless there is a strong bear reversal, both believe that the selloff will become a bull flag. Consequently, both believe that there will be at least one more new high within a next few weeks.
Can yesterday’s selloff simply be just a 2 day bull flag? It’s more likely that the trading range of the past week will continue for at least a few more days. Ultimately, the Emini will probably fall at least 30 points over the next week. After that, it will probably try to rally again. As soon as there is a strong reversal back up, the bulls will raise their stops to below the developing bull flag.
What happens after yesterday’s sell climax?
Because yesterday was a sell climax, it creates consequences for today. There is a 50% chance of follow-through selling within the 1st 2 hours. Yet, there is only a 25% chance that today will be another strong bear trend day. Finally, there is a 75% chance of at least 2 hours of sideways to up trading, beginning by the end of the 2nd hour. This might have begun at the end of the day yesterday.
Emini Globex session
The Emini was in a trading range overnight and within yesterday’s range. It is currently up 3 points with no significant momentum up or down.
EURUSD Forex: Scalper’s market
When the 5 minute chart is in a tight trading range, the only way to day trade profitably is by scalping. Here are several setups in the European session for 10 pip scalps.
The daily EURUSD Forex chart is testing the bottom of the month-long trading range. Because most trading range breakout attempts fail, the odds are that it will at least bounce. However, the rally is also unlikely to become a bull trend. It therefore would be just another leg within the trading range. While all trading ranges eventually break out, there is no sign yet of a breakout. Traders will continue to mostly scalp.
European EURUSD Forex session
The European session of the EURUSD remained in an unusually tight 30 pip range. This is difficult to trade profitably, but there are always some Forex scalp setups. There is no sign that the chart is about to breakout out of its 30 pip overnight range. Yet, the odds are that the range will get bigger in the U.S. session today. However, the odds also are against a strong trend.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
The major trend reversal was confirmed only after the strong bull breakout bar.
The Emini reversed yesterday’s bear trend, yet was unable to rally to a new all-time high. While a new high will probably come next week, the odds still favor a 30 – 40 point pullback beginning next week.
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.
