Emini buy climax and FOMC fed interest rate hike
Updated 6:43 a.m.
Today sold off on the open from yesterday’s high. It did not go above and trigger the buy signal yet, but it might later today. Since yesterday’s spike and channel bull trend will likely evolve into a trading range today, the odds are against a strong bull day. The Emini began with 2 big bear bars. It is therefore Always In Short.
The open of the week is a magnet, as is yesterday’s bottom of the wedge channel. Both are around the same level. Therefore the Emini will probably get there early today. However, the odds favor a trading range after yesterday’s bull channel. Hence, even though the bears are strong initially, the odds are against a strong bear trend day. Today will probably evolve into a trading range by the end of the 2nd hour.
Pre-Open market analysis
The Emini had a parabolic wedge top and a wedge top on the daily chart. Furthermore, the weekly chart is extremely overbought. Yet, the bears failed to create a strong trend day yesterday after a gap down open. Instead, it rallied from below yesterday’s low and formed a weak bull trend day. Therefore the Emini is still in its 3 week tight trading range.
While the daily and weekly charts are Always In Long, the odds favor a 100 pullback beginning at any time. Therefore, the upside is probably small over the next few weeks.
Weekly support and resistance
Since today is Friday, weekly support and resistance is important, especially in the final hour. Therefore, if the Emini is within 5 points of a magnet at the end of the day, it might get drawn to it by the close. So far, this week is an inside bar. Hence, last week’s high and low are important.
Furthermore, this week’s open is important. While this week is a doji bar so bar, the bears want a bear body and the bulls want a bull body. This is because an inside bar is both a buy and sell signal bar for next week. The odds of a successful breakout up or down are higher if this week has a close in the same direction of the breakout.
Overnight Emini Globex trading
The Emini is down 1 point in the Globex market. In addition, it traded in a narrow range overnight. Because yesterday was a bull bar closing on its high after reversing up from a gap down, it is a buy signal bar on the daily chart. Furthermore, it formed a double bottom with last week’s low. In addition, it turned up from the daily moving average. Therefore traders want to see what is above yesterday’s high. Hence, today will probably trade above yesterday’s high. Consequently, today will probably trigger a buy signal on the daily chart.
Yet, the daily chart has been in a tight trading range for 3 weeks. Hence, the odds are that the bulls will be disappointed by any rally today. Therefore, if there is a rally, it probably will simply be another leg in the 3 week range. Consequently, the odds favor another day with mostly trading range trading.
Yesterday’s setups
Here are several reasonable stop entry setups from yesterday. The Emini gapped down, but rallied from a small expanding triangle bottom. It briefly sold off at the end of the day from a Spike and Channel nested wedge rally to the 60 minute moving average. Yet, the bulls bought again, and the day closed on its high.
EURUSD Forex market trading strategies
The EURUSD daily Forex chart turn down sharply for 2 days from a small wedge top. In addition, the high was just 4 pips below the November 9 major high. This is therefore also a wedge top. Yet, today is a bull bar so far. This is bad follow-through after yesterday’s big bear bar. In addition, the selloff stopped at the moving average and above the bottom of the 4 week range. Hence, the bulls see the selloff from June 1 as a wedge bull flag.
The EURUSD daily chart sold of strongly for 2 days after both a big double top and a small wedge top. Yet, today so far is a bull bar. While the momentum down over the past 2 days makes more sideways to down likely, this absence of follow-through selling and a break below the 4 week range make a minor reversal more likely than a major reversal. Therefore the odds still favor a break above the November 9 major low high at some point within a few weeks.
Because the EURUSD Forex market has been in a trading range for 2 year, that breakout will probably fail to break out of the range. Trading ranges have many strong rallies and selloffs, but most reverse. That is what is likely with this 6 month rally as well.
Overnight EURUSD Forex trading
The EURUSD Forex market rallied 40 pips overnight. Yet, this is simply a pullback to the 240 minute moving average after a strong 2 day selloff. In addition, 40 pips is not particularly big after a 150 pip selloff. Therefore the odds still favor a lower high and at least one more small test down.
Because the selloff is still above the May 30 low, the bulls see it as a pullback from that rally. For them, this is a wedge bull flag. The bears need a strong break below the May 30 low to make the bulls give up. Even if they get it, the odds still favor buyers below because the momentum up in May was strong.
Because there is both a reasonable bull and bear argument, the odds favor mostly trading range price action for at least a few more day. Day traders today will mostly scalp. The bears have a slight advantage over the next week, but the bulls have an advantage over the next month.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
The Emini reversed down strongly from a test of yesterday’s high. It then rallied from a wedge bottom to form a reversal day.
The Emini reversed much of yesterday’s rally. While it was a reversal day, it could not get above yesterday’s high. It is still in its 3 week trading range with no sign of a breakout. Because the weekly buy climax is so extreme, the odds are against much higher prices. The odds are that the Emini will soon begin to correct down to the weekly moving average.
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.
