Posted 7:10 a.m.
The Emini opened at the bottom of yesterday’s trading range, and then had a bear breakout. This is a trend from the open bear trend. The bears prefer a strong bear breakout and a trend from the open bear. They do not mind if the Emini rallies as long as it fails to get above yesterday’s high. They want a lower high major trend reversal. However, the odds favor a trading range day.
Yesterday had a big range so today could become an inside day. Bulls will look for a reversal up from above yesterday’s low. They need to create buying pressure and a credible bottom, like a final flag reversal. Otherwise, traders will wait for a strong bull reversal before being confident that the early selloff created the low of the day.
As I write, the Emini is always in short, but the odds favor a trading range day. However, there is no bottom yet.
Here are my thoughts before the open. Yesterday had a strong rally on the 60 minute chart after an even stronger selloff. Big down and big up usually results in a trading range. The 5 minute chart yesterday was in a bull channel, which usually transitions into a trading range. Yesterday ended with a 3 hour trading range. The odds are that the Emini will be in an early trading range. Swing traders will wait for a strong breakout with follow-through up or down. Until then traders will look to buy low, sell high, and mostly scalp.
Day trading outlook for tomorrow’s Emini price action
The Emini was in a trend from the open bear trend. Although it went sideways for hours, it formed lower highs and lows within the trading range and was therefore also in a broad bear channel. There was a reversal attempt after consecutive sell climaxes, but it failed at the moving average.
Yesterday was a bull channel and therefore a bear flag. Today is a bear channel and therefore a bull flag. The reversal up at the end of the day was strong enough to make bulls look for a major trend reversal tomorrow. However, the weekly chart is turning down from the top of the channel and from an expanding triangle top, and the monthly chart is very overbought. Is this selloff the start of a bear trend? Probably not, but it is too early to say. At a minimum, it looks like it will be a test of the September high and possibly the October 31 gap below 2000.
Premarket price action analysis
See yesterday’s intraday market update report for today’s premarket analysis. Once there, scroll down to the heading, Day trading outlook for tomorrow’s Emini price action.
See the weekly update for a discussion of the weekly 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 Emini price action real-time throughout the day in the BrooksPriceAction.com trading room, and a 2 day free trial is available.
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.
