Emini breakout mode targets are 2500 and 2350
Updated 6:52 a.m.
The Emini began with 2 consecutive bear bars. It had 8 consecutive bear bars including yesterday. Yet, Buy The Close bulls made money buying the 2nd bear bar. Furthermore, it bounced up from yesterday’s low and around the 60 minute moving average.
The bulls want an opening reversal up from around yesterday’s low. But, after 8 consecutive bear bars, the 1st reversal up will probably be minor.
While the bears have 8 consecutive bear bars, they are still at the bottom of the 3 day range. This is therefore a sell vacuum test of support.
Since there are reasonable bull and bear arguments, the Emini will probably have a trading range open for the 1st hour or two. The bulls will try to create a double bottom around yesterday’s low. The bears want a strong breakout below yesterday’s low and then a bear trend day.
If there is a strong bear breakout or bull reversal, today still could be a trend day. More likely, it will be another day with mostly trading range trading.
Pre-Open market analysis
The Emini was mostly in a tight trading range again yesterday. Traders are deciding whether there will be one more new high. That would create a wedge with the March 1 and June 19 highs. Furthermore, the rally would likely test 2,500. Yet, because the monthly chart is so extremely climactic, the bulls will have a very difficult time pushing the market higher.
The Emini needs to test the weekly moving average and then reverse up before bulls will be willing to buy aggressively again. Therefore, traders will sell rallies, betting against a big move up. In addition, bears will sell rallies until after a test of the weekly moving average.
The most important resistance is the July 3 lower high. This is because it is the neck line of the June 28 and July 6 double bottom. If the bulls can break above that high, they will then have an increased chance of a new all-time high. Furthermore, they would then probably test the 2500 Big Round Number. On the other hand, if the bears can reverse the 2 day rally to below the double bottom, the Emini will probably fall to below the May 18 major higher low. Consequently, that would be a break below the weekly moving average.
Overnight Emini Globex trading
The Emini is down 2 points in the Globex market. It has been mostly in tight trading ranges for 2 days. In addition, most days over the past month have been trading range days. The odds are that today will have at least one swing up and one swing down as well. However, since it is in a 2 month trading range, it is in breakout mode.
Because the weekly chart is so overbought, there is an increased risk of a big move up or down over the next few weeks. The bears see the chart as being is a sell climax. Yet, if they are extremely confident, they might be too short. Consequently, a bull breakout could be bigger and faster than what seems likely.
Yesterday’s setups
Here are several reasonable stop entry setups from yesterday.
EURUSD Forex market trading strategies
The 240 minute EURUSD Forex chart broke above a 3 day triangle, but it is still within its 10 day trading range.
The EURUSD daily chart has been in a bull trend for 7 months. It is now near the top of a 2 year trading range. Since most trading range breakouts reverse, the odds are that this one will as well. It has tested 1.1500 to 1.1700 many times over the past 2 years. Every test resulted in at least a 200 pip pullback.
Most led to a 2 month trading range on the weekly chart. While there eventually will be a breakout up or down, betting that any one attempt will be the successful one is a low probability bet. Most likely, this one will lead to a trading range as well.
2 year trading range
The top of the range is the August 2015 high, just above 1.2000. Hence, if the EURUSD Forex market breaks above its 2 week range and rallies for a 150 pip measured move up based on the 2 week bull flag, it would be around 1.1600 and still in its 2 year range. There is a gap between the June 2017 low and the May, 2017 high. If that is a measuring gap, it projects up to just above 1.1700. The EURUSD weekly chart has only been above that price a few times in 2 years. Each time, it quickly reversed down.
The momentum up overnight and over the past 2 weeks and 6 months favors higher prices, the odds are that the best the bulls will get is a trading range for a couple of months. The top of the range will probably be between 1.1500 and 1.1700. The bottom of the range might be around the June 23 low around 1.1200.
Overnight EURUSD Forex trading
The EURUSD Forex market broke above its 3 day triangle overnight. Yet, the rally was only 20 pips, and it quickly pulled back. In addition, it did not break above its 2 week range.
While the triangle breakout is good, the bulls need much more strength. Otherwise, the rally is just another leg in the 2 week range. Because the momentum up on the daily and weekly charts is strong, the odds still favor slightly higher prices. However, since the EURUSD has failed so many times between 1.1500 and 1.1700, the odds are that the EURUSD Forex market will soon enter a 300 pip tall trading range. In addition, it will probably last at least 2 months.
Bear day traders want a double top with the June high. If they get a reversal down below the July 5 neck line of the double top, they would then try to test the gap below the June 20 low.
Because the EURUSD is still in its 150 pip tall 2 week trading range, most day traders are scalping. Since it is near the top of the range, bear swing traders are selling, looking for a test of the bottom of the 2 week range. In addition, bull swing traders are holding long for a breakout above the 2 week range. Their stop is either below the 3 day triangle or the July 5 low.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
There was an early sell climax, and then a strong bull trend reversal. Today had a lower high major trend reversal and then a higher low major trend reversal.
The Emini has been in a trading range for over a month. The bears got a strong selloff early today. Yet, the bulls bought it and kept it above the double bottom of the past 2 weeks. Today’s reversal up now converted the 2 week range into a triangle. The reversal up was strong enough to make at least slightly higher prices likely tomorrow.
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.
