Dow 20000 resistance and possible small double top
Today opened with 2 small dojis near the top of yesterday’s trading range and at the 60 minute moving average. It also is at the open of the week, which is also a doji so far. The odds are that today will be a small day and that the week will close around here and create a doji bar on the weekly chart.
Because this week is small and a doji within last week’s doji on the weekly chart, today will probably be another small day. Yet, traders always need to be ready for a black swan. When everyone expects something, the odds of the opposite go up. Hence, today could be a huge trend day.
Pre-Open Market Analysis
The Emini sold off again yesterday and is trying to get below last week’s. This is because last week was a small reversal bar on the weekly chart. In addition, it followed a buy climax in the prior week. Yet, the rally on the weekly chart was strong. Therefore, a reversal attempt will more likely lead to a bull flag than a bear trend.
Because today is Friday, weekly support and resistance are important. Hence, the most important price is last week’s low. The bears want a break and close below. The bulls therefore want neither. If the Emini does fall below last week’s low today, the bulls will try to prevent it from closing there. Even if it does, the odds are that there are buyers below and the selloff will not get far.
Overnight Emini Globex trading
The Emini is down about 2 points in a narrow Globex range. Because yesterday closed above its midpoint, the bulls see it as a buy signal bar. The odds are the the Dow will get above 20,000 this year. Therefore, the odds are that the Emini will test its all-time high of 2273.00. Yet, because of the 8 day tight trading range and holiday trading, today will probably be mostly in tight trading ranges.
EURUSD Forex Market Trading Strategies
The daily EURUSD chart has a micro double top bear flag at the bottom of a 2 year trading range. This is a double top bear flag on the 240 minute chart. The EURUSD has been sideways for 6 days. It is therefore deciding whether the bear breakout will continue down to par (1.0000) or reverse back up. Because par is an important magnet and it is nearby, the odds favor a test. Hence, any rally will probably be a bear flag. It would therefore probably have a bear breakout and then a test of par.
The bulls want a lower low major trend reversal on the weekly chart. Yet the 8 month bear channel is tight. Therefore the 1st reversal up will probably be minor. Hence, the bears will sell it and the odds favor a test back down to the December low and then to par. If the bulls are then able to create a double bottom, they will have a better of a rally back to the October low breakout point.
Since the end of December is usually quiet, day traders will probably mostly be scalping.
Overnight EURUSD Forex scalping
The EURUSD Forex market traded mostly in a 20 pip range overnight, which makes even scalping difficult. It is trading near the open of the week. Hence, if the week closes around here today, the weekly candlestick pattern would be a doji.
This is a sign of balance. Because it is coming after a 3rd push down, it is a buy signal bar in a tight wedge bottom. Yet, a tight wedge usually only leads to a minor reversal. Therefore, if there is a rally, it will probably be limited to a few weeks. Usually a bottom requires at least a small double bottom. If the bulls get that over the next month, the EURUSD market could reverse back up into its yearlong trading range or broad bear channel. This is despite targets below.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
The Emini had an unusually quiet day today, but closed near its high. The week between Christmas and New Years is usually the quietest of the year. Most days have small ranges and spend most of the time in tight trading ranges. Yet, most days will have at least one swing. Furthermore, one day might even be a trend day.
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.