Emini ii final bull flag before pullback
Updated 6:49 a.m.
The Emini gapped up on the weekly chart. In addition, it is in a parabolic buy climax on the daily chart. The odds are that the breakout will lead to a trading range this week.
The day began with a trend from the open bull trend. Because the Emini is so overbought on every time frame, it will probably not continue as a strong bull trend day. Hence, the odds are that it will either form a parabolic wedge top and a reversal down, or a 3 – 4 hour trading range. There is no top yet, but the odds of a continued strong bull trend day are about 30%.
Pre-Open Market Analysis
The Emini rallied strongly last week. Thursday and Friday were consecutive inside bars and therefore created an ii breakout mode pattern. After the 2 week strong rally, the odds are that there are buyers below.
Furthermore, Friday was a bull bar. That therefore increases the chances of a successful bull breakout today. Yet, because the rally was extreme, it was climactic. Hence, a bull breakout will probably not last more than a few days before the Emini enters a trading range. Therefore, this week will probably be the start of a trading range.
Overnight Emini Globex trading
The Emini is up 5 points in the Globex market. Yet, even though there is no clear top yet, the daily chart is in a parabolic buy climax. Hence, the odds are that this week will go sideways. This is similar to the November 25 and December 13 buy climaxes rallies. The odds are that there will be sellers above Friday’s high. Therefore, if today gaps up, the gap will probably close today or tomorrow. The chance of a strong rally this week is only about 30%. Sideways is more likely.
EURUSD Forex Market Trading Strategies
Because the 240 minute EURUSD chart has both a reasonable double top and a reasonable double bottom, the bulls and bears are balanced. Hence, the EURUSD is again in breakout mode. Last week’s rally broke strongly above the bear trend line. The odds therefore favor at least a bounce from around last week’s low. This would therefore create an attempt at a major trend reversal.
The EURUSD 240 minute chart has had repeated swings up and down in tight channels. Yet, it is still in its 4 month trading range. Furthermore, that range is a the bottom of a yearlong trading range.
Major trend reversal attempt this week
Last week’s rally broke far above the bear trend line on the 240 minute chart. In addition, it had many bars completely above the moving average. This is a sign of strong bulls. As a result, the odds are that it will find support around last week’s low. Hence, it will probably try to create a major trend reversal this week. Since the 2 day bear channel is tight, the bulls will probably need to stop the selloff for a day or two before they can create the bottom attempt.
Double top bear flag
The bears see the 2 day selloff as a double top bear flag. But, because the selloff is still above the January 11 major higher low, it is more likely just part of the trading range that began with that low. Since reversals within trading ranges usually come after breaking through support and resistance, the bottom might not come until after a break below that January 11 low.
Head and shoulders bottom
On the daily chart (not shown), the bulls want this month long selloff to rally from above the December low. If so, they would buy the reversal up because that would be an attempt at a higher low major trend reversal. Furthermore, it would be a head and shoulders bottom.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
I had to leave a little early today. The Emini began with a gap up and a trend from the open bull trend. Yet, it reversed down after a small final flag. The bears got 2 legs down, but the bulls bought the selloff. Hence, the Emini rallied again for the rest of the day.
The Emini gapped up again on the weekly chart. This is therefore consecutive gaps up on the weekly chart. Because that is unusual, it is unsustainable and climactic. Yet, ther is no top yet.
Since the daily chart is in a buy climax and last week ended with an ii pattern, the odds are that the rally will end today or tomorrow. Most climaxes are followed by trading ranges, not reversals. Therefore, the Emini will probably go sideways for the rest of the week.
It is in the cluster of measured move targets. It therefore can turn down at any time. Yet, the bears will probably need at least a micro double top. The odds still favor a test of the December low at some point in the next couple of months. That is therefore about a 5% pullback.
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.
Thank you for the update.
Hi Al,
Do you have a guideline for a ” minimum rally ” that is ” strong enough ” that it will be likely that Bulls will buy the 1st pullback ?
Thank you
My general rule is that if there are 2 strong bull bars on the open, the Emini is Always In Long and the odds are better than 50% that the bulls will buy the 1st pullback. If there is a 4 – 6 bar bull micro channel, even if the bull bars are small, the odds are at least 60% that the bulls will buy. Today’s rally was strong enough and the context was good enough so that the probability was about 70%.