Posted 7:34 am PST. I posted the chart below after the close.
Yesterday ended always in short with the reversal down from the wedge top and the 3 consecutive bear bars. A trading range was likely after yesterday’s major trend reversal, but instead there was a strong bear breakout on the open that reversed up from the breakout below yesterday’s low, creating a double bottom.
The market is deciding if the selloff will be a spike followed by a bear channel, or if it is simply a buy vacuum test of yesterday’s low and a large high 2 buy setup. The reversal up at 7 am is a possible low of the day, but the probability was low until there the 7 bar bull microchannel at 7:25. At that point, there was disappointing follow-through for the bulls and bears so the day will probably be in a trading range for at least a couple of hours. We might have seen both the low and high of the day. The rally is big enough to reduce the chances of a big bear trend day. Big down and big up usually means big confusion and then sideways. When there is confusion, bulls tend to scale in near the bottom and bears tend to scale in on any rally. Both tend to scalp, and the result is usually a trading range.
The market might decide between trend resumption down and trend reversal up late in the day after the trading range becomes clear.
This reversal down is a lower high major trend reversal on the 60 minute chart and it is occurring at the top of the weekly channel. It might be the start of a pullback on the weekly chart.
Traders can see the end of the day bar-by-bar report by signing up for free at BrooksPriceAction.com. I talk about the detailed Emini price action real-time throughout the day in the BrooksPriceAction.com trading room, and a 2 day free trial is available.
I sometimes refer to bar numbers (there are 81 five minute bars each day) instead of times on the 5 minute. When I mention time, it is USA Pacific Standard time (the market opens at 6:30 am PST, and closes at 1:15 pm PST). Background information on this report can be read on the Intraday Market Update page.
