Emini is neutral before today’s government shutdown vote
Updated 6:55 a.m.
The Emini gapped up to near Tuesday’s major lower high. The bears want a double top lower high major trend reversal on the 60 minute chart. The bulls want any early selloff to be a pullback from the big gap up. The early tight trading range increases the chances of a lot of trading range trading today.
At the moment, the Emini is Always In Long, but the bears are trying for an early reversal down. Until there are consecutive strong trend bars up or down, the odds favor a trading range open. That means sideways for an hour or more as traders decide on the direction of the breakout.
Pre-Open market analysis
Monday was a sell signal bar on the daily chart, and yesterday broke back above Monday’s low. However, it did not break above Tuesday’s major lower high on the 5 minute chart. That is the target for the bulls today. This 3 day rally is probably a test of Tuesdays high. The bears want a double top with that high and then a bear trend on the daily chart. The bulls want to break strongly above it, and then a breakout to a new all-time high.
Because a break above Tuesday’s high means a resumption of the bull trend and a reversal down from there means a possible bear trend, today will probably test that high and then pause. It will probably leave the decision for next week.
Since today is Friday, weekly support and resistance can be magnets, especially in the last hour. The most important targets are last week’s all-time high and this week’s low.
Overnight Emini Globex trading
The Emini is up 8 points in the Globex market. In addition, it rallied 2 ticks above Tuesday’s major lower high. That is important resistance. If the Emini rallies strongly above it this morning, the bulls will then probably test the all-time high today or next week. If the bears get a reversal down, they would have a double top lower high major trend reversal on the 240 minute chart.
Since the Emini is at important resistance, there is an increased chance of a trend day up or down. When the rally to the resistance has not been strong, the Emini usually goes sideways there for a few hours before deciding whether to break above or reverse down. Since the 2 day rally has not been very strong on the 5 minute chart, the odds are that a gap up today will lead to a trading range open.
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
There is both a double top and a potential double bottom in the 5 month trading range. The pullback from the November rally now has 4 consecutive bear bars. However, they are small. Furthermore, there is support at the November 21 bottom of the buy climax. In addition, that is around a 50% pullback from the November rally.
The pullback from the November parabolic wedge top now is accelerating down. There are 4 consecutive bear bars. This means that this is a sell vacuum test of the November 21 low. That is the bottom of the climactic final rally in the November parabolic wedge.
Since the 4 bear bars are small, the selloff is not yet very strong. In addition, it is testing the support of the November 21 higher low and a 50% pullback. The odds are that the EURUSD daily chart will bounce in this area. However, after 4 consecutive bear bars, the bulls will probably need at least a micro double bottom before they can go back and test the November high. Consequently, the daily chart will probably be sideways to down for at least a few more days.
The bears want the selloff to accelerate down and then break below the November 7 bottom of the 5 month trading range. They see the parabolic wedge rally as the final gasp of the bulls. Furthermore, they want it so be a lower high major trend reversal. However, trading ranges resist breaking into trends up or down. Consequently, the odds are that this selloff will soon disappoint the bears and the trading range will continue.
Overnight EURUSD Forex trading
The 5 minute chart sold off 50 pips overnight. It is now in a buy zone because it is around a 50% pullback from the November rally and the November 21 major higher low. Bulls will therefore look to buy.
However, since the selloff has not had a pullback in 6 days on the daily chart and now has 4 consecutive bear day, the bulls will probably be unable to get a strong reversal up today. Instead, they probably will begin to form a trading range for a few days. Then, they will try for a double bottom. At a minimum, they want to retrace about 50% of the 2 week selloff. This means that a 100 pip rally will probably begin next week.
The bears want a strong break below the support around 1.1712 at the November 21 low. However, the bear bars have been small and the daily chart is in a trading range. Consequently, the bears will probably begin to take profits around prior lows on the 5 minute chart. They will prefer to sell rallies.
With both bulls and bears expecting a trading range for a few days, traders will look to buy reversals up from new lows and sell reversals down from rallies. The chart will probably be sideways in a 50 – 70 pip range for several days.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
The Emini traded above Tuesday’s major lower high, but there was not much follow-through. It was a trending trading range day.
While the bulls broke above Tuesday’s major lower high, they had a weak breakout. The bears therefore still can try to create a lower high major trend reversal on the 60 minute chart next week. Although there are buy climaxes on the daily, weekly, and monthly charts, the odds still favor at least slightly higher prices until there are consecutive big bear trend days on the daily chart. Last week’s bear days were not big enough.
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.
