Emini bulls want tax reform, creating growing buy climax
Updated 6:58 a.m.
The Emini gapped above yesterday’s high, but reversed down and closed the gap on the 3rd bar. Yet, the sell signal bar for the failed breakout above yesterday’s high had a bull body and yesterday had a 50 bar small pullback bull trend. Therefore, the bears will probably need at least a micro double top for a 2nd failed breakout above yesterday’s high. If they get it and there is a bear sell signal bar, it would be a reasonable short for a swing down
The bulls are trying to create an opening reversal up from the moving average. While they have consecutive bull bars and the Emini is Always In Long, they need more bull bars. Otherwise, this will be a trading range open and the bears will try for a 2nd reversal down.
Since yesterday was a quiet day and today’s open is fairly quiet, the odds are against a big trend day up or down today. The market is now deciding on direction of the initial swing.
Pre-Open market analysis
The Emini rallied on the open yesterday with an 11 bar bull micro channel. It then went mostly sideways, but closed on its high. The rally on the daily chart is strong. The bulls will therefore buy the 1st reversal down. Hence, the bears will need at least a micro double top on the daily chart before they can take control. The odds favor higher prices this tomorrow or Wednesday.
Because yesterday had a credible top on the 5 minute chart, it will try to create another top today. If today’s top is also reasonable, it would then be a consecutive top and have a higher probability of a bear swing today. Yet, the 4 day breakout on the daily chart is strong. Therefore, any swing down on the 5 minute chart will probably just be a bull flag on the 60 minute chart.
The monthly chart is in its 12th bar of its bull micro channel and therefore the odds are at least 50% that this month will trade below last month’s low and form an outside down month, or next month will trade below this month’s low. The reversal will probably fall about 100 – 200 points. However, until there is a top, there is no top and the odds continue to favor at least slightly higher prices.
Overnight Emini Globex trading
The Emini is up 2 points in the Globex session. After 4 strong bull days on the daily chart, today will probably be a pause day. This means it probably will not be another strong bull day.
In addition, yesterday had a parabolic wedge top that failed to create a reversal. The odds are that the bears will try again today. If they get another top, they will have consecutive tops. This has a higher probability of success. Yet, because the rally on the 60 minute and daily charts is strong, any selloff will probably only last a day or 2 and form a bull flag on those charts.
Yesterday’s setups
Here are several reasonable stop entry setups from yesterday. I sometimes also show limit order entries and entries on the close of bars.
EURUSD Forex market trading strategies
The EURUSD daily Forex chart is stalling at the support at the bottom of the 2 month trading range. In addition, it is forming buy setups. There is a micro double bottom with last week’s low. Also, it is also a double bottom higher low with the August 17 major higher low. Furthermore, it is a 2nd leg down from the high and therefore a big High 2 bull flag. Finally, it is a wedge bull flag.
The EURUSD daily chart has sold off for a month. Yet, it reversed up overnight at last week’s low. The reversal is also a double bottom with the August 17 major higher low and a micro double bottom with last week’s low. Furthermore, it is just above that major low. In addition, the selloff was a big Low 2 bull flag from the September 8 high. Finally, it formed a wedge bull flag. Therefore, the bulls so far are continuing to get higher lows. The odds are that it will retrace about 50% of the selloff from the September 8 high, even if it first breaks below the August 17 major higher low first.
The rally will probably go about 200 pips up from the bottom of the 2 month trading range before the bears try to create a lower high major trend reversal. That would also be a big head and shoulders top.
The bear case
The bears would prefer that the current selloff would simply continue below the August 17 low and reach the next support. That is a measured move down to around the July 5 low. While this is possible, the selloff is stalling at support and forming a collection of buy setups. Therefore it is more likely that the daily chart will reverse up to around the middle of the 2 month trading range first.
The initial reversal might stall at Friday’s high and form a small Low 2 bear flag at the moving average. If they succeed, they would have a 40% chance of a strong break below the 2 month trading range and a swing down. There is currently a 60% chance that the daily chart will reverse up here or from just below the August 17 low and rally for 200 pips. The strong bull trend on the weekly and monthly chart reduce the odds of a strong bear breakout on the daily chart.
Overnight EURUSD Forex trading
The bulls last night reversed up from just below the 1.1700 target and from just above the August 17 major higher low. Yet, the reversal has not been strong. However, that is typical in a trading range. The odds are that the daily chart will begin a 200 pip rally up from the overnight low, or after one more push down in the next week to below the August 17 low. The bulls therefore are looking to buy reversals.
However, because the daily chart is in a 5 day trading range, the bears might get one more new low before there is a clear reversal and a swing up. Consequently, this 5 day range might continue for a few more days. If so, traders will mostly scalp as they wait for either a strong bear breakout, or, more likely a strong reversal up.
The bears will sell rallies, like around the daily moving average and Friday’s high. However, they see that their selloff is stalling at support. Consequently, they will begin to scalp more, knowing that a 200 pip rally is more likely than a strong, successful break below the 2 month trading range.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
The bears sold a 2nd failed reversal above yesterday’s high. The bulls bought the reversal up from a 1 tick failed breakout below the opening range. The day became another small pullback bull trend day.
The Emini has had a series of small pullback bull trend days in a very strong breakout to a new all-time high on the daily chart. While there are now buy climaxes on the 60 minute, daily, weekly, and monthly charts, there is no top yet. Therefore the odds favor at least a little higher.
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.
I like the EURUSD analysis. But there appears to be a mistake where you twice refer to “Thursday’s high”, which should be Friday’s high (September 29)
You are right. I fixed it. Thank you for pointing it out!