Outlook for tomorrow’s Emini price action and day trading
The Emini tested yesterday’s low and reversed up, after 3 consecutive sell climaxes. It tested it again late in the day and reversed up again. It formed a trading range day, as expected.
The Emini gapped up today after 3 consecutive big bear trend days. It sold off on the open to test yesterday’s low and then reversed up from a higher low major trend reversal. The bull channel lasted about 20 bars and had at least 2 legs, which was the usual goal after consecutive sell climaxes (it had 4 or 5 legs up, and topped out with a low 4 sell setup). From there, it then trended down to test the yesterday’s low again. It tried to duplicate the strong selling into the close that happened over the past several days. However, the bears were exhausted and the day closed in its middle, forming a doji bar and an inside bar on the daily chart.
What does that mean for tomorrow?
Today was the first pause in a strong bear trend on the 60 minute and daily charts. On the daily chart, today had a low at yesterday’s low. The bears see today as a signal bar for a short tomorrow, selling at 1 tick below today’s low. The bears also believe that the first reversal up on the daily chart will probably not get very far, and tomorrow they will look to sell above today’s high.
The bulls see the 3 big bear days as an exhaustive sell climax. They expect the short tomorrow below today’s low will fail and will be followed by a reversal up. Day traders will look to buy any reversal up from below today’s low, and they will sell any reversal down from above today’s high. They expect a trading range and possibly several trading range days after consecutive sell climaxes. This is the most likely outcome.
S&P500 Emini intraday market update for price action day traders: consecutive sell climaxes so a reversal up and then trading range likely
The Emini gapped up big after a big move down. The buy and sell signal bars were bad. This is trading range price action. Since there were consecutive sell climaxes, the odds favored at least 20 bars and 2 legs up. Also, since the Emini was reversing up from breaking below the bear channel, there was a 70% chance that there would be a rally that tested the top of the channel.
Posted 7:40 a.m.
The Emini has had consecutive sell climaxes so a trading range likely. The Emini is trying to create an early low of the day. The Emini opened with a big gap up after a big selloff into yesterday’s close. Big down, then big up means big confusion, and confusion is a hallmark of a trading range. Also, signal bars today have been bad, as has been the follow-through. Day traders see this as trading range price action. At the moment, it is testing yesterday’s low, but there has been a lot of trading range price action so far. The context is also good for a trading range, after consecutive sell climaxes to the bottom of the bear channel. Although there might be legs up and down that last an hour or two, the Emini will probably be in a trading range for day traders for most of the day. There might be a strong breakout up or down at the end of the day.
This is the third push down on the 5 and 15 minute charts, and the Emini is in a tight channel. This is a consecutive sell climax type of price action and it usually is followed by a fairly strong reversal. At a minimum, the market will probably have at least 10 bars and two legs up on the 15 or 60 minute charts. Although the climactic selling might not yet be over, a rally for a day or two is likely soon before the selling resumes.
Before the open comments on S&P500 Emini 60 minute, daily, weekly, and monthly candle charts: consecutive sell climaxes so trading range likely
This is the third consecutive day down, and each prior day tried to reverse up. That makes yesterday a third push down and a possible wedge bottom on the 60 minute chart. Although the Emini could continue to collapse, the bears will likely take partial profits today or soon, and that will probably lead to a doji day or a reversal day on the daily chart. However, since the breakout has been so strong, the first reversal up will probably be sold.
The daily Emini chart had strong follow-through selling after Friday’s strong bear breakout. This confirmation increases the chances that there will be at least one more leg down after the first pullback. There will therefore probably be sellers above the high of the prior day, and this give traders a high probability of a profitable short on the daily chart at some point within the next couple of days. Bears will sell above the high of the day before for a test of the bear low.
The daily and 60 minute charts are oversold, but there are trapped bulls above who will sell out of their longs on the first reversal attempt up. Those bulls now believe that a second leg down after this breakout is likely, and no one knows how far down it will go. This makes bulls unwilling to hold onto their longs. They will use the first rally to exit with a smaller loss.
See the weekly update for a discussion of the weekly chart.
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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.
