Emini 2nd leg down in early August after buy climax
Intraday market update: Thursday August 2, 2018

Emini 2nd leg down in early August after buy climax

I will update again at the end of the day.

Pre-Open market analysis

The Emini sold off strongly yesterday and formed an outside down day prior to the 11 a.m. FOMC announcement. However, it closed above the low and the daily chart had a tail below. Since the past 3 weeks were mostly sideways, there is an increased chance of a trading range day today.

The odds still favor a 2nd leg down on the daily chart. But, the pullback from the 1st leg down might go sideways to up for more bars before the 2nd leg begins. The odds are that the Emini will fall about 70 – 100 points below Friday’s high, and then resume its trend up to a new high. There is still a 30% chance of a break below the February low and a measured move down to around 2300.

Since there is a lower high major trend reversal and a head and shoulders top on the 60 minute chart, there is a 40% chance of a measured move down over the next couple of weeks. While the odds still favor mostly trading range trading within the 3 week trading range, there is an increased chance of a surprisingly big trend day up or down this week.

Overnight Emini Globex trading

The Emini is down 13 points in the Globex session. It will therefore probably fall below last week’s low. That would trigger a sell signal on the weekly chart. The bears want a measuring gap and a 50 point measured move down.

But, the sell signal bar on the weekly chart had a bull body. That lowers the probability of a trend down. Furthermore, an early reversal up would create an expanding triangle bottom on the 5 minute chart.

Because the Emini is at support, there is an increased chance of a surprisingly big trend day up or down.

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. My goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not in a position at the moment, these entries would be logical times for him to enter.

EURUSD Forex market trading strategies

After failing to break above the top of the 3 week trading range and the 2 month triangle, the EURUSD daily Forex chart has sold off for 3 days. It is now trying a bear breakout.

The EURUSD daily Forex chart is at the apex of a 2 month triangle. It broke above the bear trend line 3 days ago and now is trying to break below the triangle. A failed breakout and then an attempted breakout in the opposite direction has a higher probability of success.

However, there have been many small rallies and selloffs for 3 months and each reversed. Therefore, the odds are that this 3 day selloff will as well. But, since the legs now are lasting only 2 – 3 days, the tension is building. This makes a successful breakout likely within the next few weeks.

Traders will continue to bet on reversals until there are consecutive closes beyond the triangle. Furthermore, they want to see big trend bars far beyond the triangle. Once they do, they will look for a 300 pip measured move, based on the height of the triangle.

Since the triangle on the weekly chart is late in a bear trend and at support, it will probably be a Final Bear Flag. This means that the odds are that a bear breakout will reverse back into the triangle after testing its measured move target at around 1.1200.

Overnight EURUSD Forex trading

The EURUSD 5 minute Forex chart has sold off 140 pips in a tight bear channel for 3 days. The overnight selling broke below the 2 day bear channel. Since a bear break below a bear channel usually fails, the odds are that the selling will stop today.

The chart has been in a 30 pip trading range for the past 4 hours. That is likely to continue today. In addition, the recent legs up and down have lasted 2 – 3 days. Since this is the 3rd day, bulls will begin to buy again.

Because the 3 day selloff has not been strong and the past 4 hours have been sideways, the bears will begin to take profits and bulls will buy at new lows on the 5 minute chart. Furthermore, the bulls will look for a 50 – 100 pip bounce over the next few days. But, since a breakout of the triangle is likely within a few weeks, day traders will be quick to swing trade if they see a strong breakout beginning.

Summary of today’s S&P Emini futures price action and what to expect tomorrow

Here are several reasonable stop entry setups for today. I sometimes also show limit order entries and entries on the close of bars. My goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not in a position at the moment, these entries would be logical times for him to enter.

The Emini reversed up on the open from below last week’s low, yesterday’s low, and the neck line of a head and shoulders top on the 60 minute chart. It then traded above yesterday’s high to form an outside up day after yesterday’s outside down. Today was a strong day for the bulls. If they get follow-through buying tomorrow, it will increase the odds of new all-time high within the next 2 months.

The bears still want a 2nd leg down from the 2 big bear days on Friday and Monday. They need a strong bear day tomorrow to erase today’s bullishness.

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.

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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.

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