Emini has an ioi bull flag and 20 Gap Bar buy setup on the weekly chart
Updated 6:43 a.m.
The Emini had a gap up on the weekly chart, but it was small. The first bar was a bull doji and the 2nd bar had a big tail on top. This is not a strong resumption of Friday’s trend. This weak buying increases the odds that the gap will close today. It also increases the chance of an early trading range. Friday’s close and the EMA are support, as are the higher lows below 2780.
Since Friday’s bull channel was tight, the 1st selloff will probably be minor. This further increases the odds of an early trading range.
Pre-Open market analysis
Last week formed a good buy signal bar on the weekly chart for a High 2 bull flag at the 20 week EMA. The odds are that this week will trade above it, and possibly gap above it, last week’s high and trigger the weekly buy signal. The rally will probably last at least 1 – 2 weeks and it might also continue up to a new high.
There is always a bear case. February formed a wedge lower high on the daily chart. The bears therefore want the 6 day rally to form a double top with that high. They then want a break below the neck line, which is the low of 2 weeks ago. Finally, they want the selloff to test the February low. At the moment, they have only a 30% chance of a test of the February low.
Overnight Emini Globex trading
After rallying above 2800 overnight, the Globex market pulled back. It is still up 5 points. The day session will therefore open around Friday’s high instead of gapping far above it. This is disappointing for the bulls. Because Friday was a buy vacuum test of the February 27 lower high, there is an increased chance of a reverse down today. This would increase the odds of a double top on the daily chart.
Friday was a buy climax day. There is therefore only a 25% chance of another strong bull day today. The overnight pullback is consistent with that. In addition, there is a 75% chance of at least a couple hours of sideways to down trading beginning by the end of the 2nd hour. However, there is a 50% chance of some follow-through buying in the 1st 2 hours.
Friday’s high, 2800, and Friday’s late 2 hour tight trading range are magnets. Hence, the Emini might spend a lot of time between 2780 and 2800 today.
Friday’s setups
Here are several reasonable stop entry setups from Friday. I sometimes also show limit order entries and entries on the close of bars.
EURUSD small sideways day likely
The EURUSD daily Forex market has 2 doji bars in the middle of a 3 month trading range. The bulls and bears are perfectly balanced.
After a strong bull trend in 2017, the EURUSD daily Forex chart has been in a trading range in 2017. It has had several strong legs up or down, and there is no evidence that it is about to break out. Since the weekly chart is in a bull trend and there is a bear trend line just above, the odds favor a bull breakout.
However, that monthly bear trend line is resistance. Resistance is a magnet. Like all magnets, its pull is stronger when the market gets close. At the moment, it is likely that there will be a bull breakout within a couple of months.
Yet, the bull trend on the weekly chart has been weaker for 6 months. The current 8 week trading range might therefore be the final bull flag in the trend. That means there is an increased chance of a bull breakout failing. A reversal down from the monthly bear trend line would create a wedge bear flag on the monthly chart.
The bears prefer a bear breakout below the 3 month range without a bull breakout coming first. Their target is a measured move down based on the 400 pip tall height of the range. That would be around 1.17. That is the middle of the November range. If the EURUSD got there, it would probably get to the 1.15 bottom of that range. It would then be testing the top of the 2015 – 2016 trading range.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been in a 60 pip range for 2 days. In addition, it is in the middle of last week’s 300 pip rally. While it has sold off 60 pips overnight, it is still above Friday’s low. Friday was a doji bar on the daily chart in the middle of a trading range. It is therefore neutral. The odds are that beats will not get a strong break below Friday’s low. Consequently, there is probably not much left to the overnight selloff. Traders will begin to switch to scalping.
The overnight bear channel was tight. Tight bear channel usually do not reverse into bull trends without 1st going sideways for 20 or more bars. As a result, the upside is small for at least a couple of hours. Since Friday was a doji and today is overlapping most of it, there is an increased chance of another doji. Therefore today’s open of 1.2311 will be a magnet all day.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
After selling off early from above the February 27 major lower high, today entered a trading range. The late rally could not hold above the open.
The Emini sold off from above the February 27 major lower high. Today is therefore a sell signal bar on the daily chart for a double top with that high. Since today was not a big bear bar and it followed 5 strong bull bars, this is a low probability sell setup. More likely, the Emini will go sideways for at least a couple of days.
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.
Please Al
What is ioi?
I need a glossary for the common terms you use.
Thanks Ken.
I just checked under Learn to Trade and I saw that Richard put a glossary there.