Emini eyes Alabama Moore vote and FOMC rate hike
Updated 6:48 a.m.
The Emini opened with a small bear bar and then a doji. This is a quiet open after yesterday’s Buy The Close finish. The all-time high is a magnet just above. However, yesterday’s finish was a buy climax. The bulls will probably need a pullback before they can get a strong rally. The bears therefore want a parabolic wedge top and an early high of the day.
At the moment, the Emini is Always In Long, but the bars are small. In addition, it is in a buy climax from yesterday. This reduces the chances of a strong bull trend from the open. Since the bull channel is tight, the bears will probably need at least a micro double top and then 3 or more consecutive bear bars before traders will believe they have taken control. The location and the buy climax are good for the bears. However, until they get a strong bear breakout, a trading range open for an hour or more is more likely than an early bear trend. The target for the bears is the bottom of yesterday’s climactic rally at the end of the day.
Pre-Open market analysis
Today is the Alabama senator vote. If Moore loses, traders will believe that Trump is weaker. Therefore, senators will be less willing to agree with his proposals. That includes tax reform.
Another catalyst for a 5% correction comes at Wednesday’s 11 a.m. FOMC announcement. That is when the Fed will probably raise interest rates. Everyone knows that the Fed will be raising rates for several years. However, if the Fed changes the wording regarding the speed of the rate increase, that could be a negative surprise.
The Emini has rallied for 4 days after 2 strong, brief reversals down on the daily chart. Yesterday’s strong close increases the chance of a new all-time high today. In addition, it increases the odds of a gap up to a new high. However, the extreme buy climaxes on the daily, weekly, and monthly charts will limit how much longer the Trump rally will continue. Yet, until there are consecutive big bear trend days, the odds continue to favor at least slightly higher prices.
Overnight Emini Globex trading
The Emini is up 2 points in the Globex market. It might gap up today, possibly to a new all-time high. Since that high is resistance, there is an increased chance of a big rally above or a big reversal down. More likely, it will enter a trading range around the high. Since tomorrow is an FOMC announcement, today has an increased chance of being quiet.
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
The bulls are trying to get a micro double bottom with Friday’s low and a double bottom with the November 21 low. The bears need a strong break below that low for a test of the bottom of the 5 month range. After 2 doji bars just above support, today will probably be a small day.
The EURUSD daily chart retraced about 50% of the November rally. It is now just above the November 21 major higher low. Since legs in trading ranges usually go past support and resistance before reversing, the odds are that this selloff will test 1.1712. The bulls want a double bottom with that low and a micro double bottom with Friday’s low. The odds are that there will be at least a 100 – 150 pip bounce from that level.
The bears want the 3 week selloff to continue down to below the bottom of the 5 month trading range. However, trading ranges resist breakouts. Furthermore, successful breakout usually follow strong legs. Since this leg lacks consecutive big bear trend bars it is not strong. Hence, the odds are against a strong breakout below the November 7 low of 1.1553. More likely, this selloff is just a leg in a trading range. It therefore will probably bounce soon at the support of the November 21 low.
There is an FOMC announcement tomorrow at 11 a.m. PST. Since there is always a potential for a surprise announcement, there is a reasonable chance of a big move after the news. However, the daily chart will probably remain in its trading range and bounce within a week.
Overnight EURUSD Forex trading
The 5 minute chart just broke below yesterday’s low. However, Friday’s low is support. In addition, the past 2 days were doji bars on the daily chart. That increases the odds of a doji bar today. Doji bars have tails, which means reversals. There is therefore an increased chance of a reversal up today or tomorrow, possibly after the 11 a.m. FOMC announcement tomorrow.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
The Emini rallied for the 1st half of the day. It then went sideways after breaking above a 5 day and a 2 hour channel. After a double top lower high major trend reversal, it sold off in the final hour to close around the midpoint.
The Emini rallied to a new all-time high today and then entered a trading range. Since it closed around the midpoint, it is a reversal day. It is therefore a sell signal bar for tomorrow for a failed breakout above last week’s all-time high. After 4 consecutive bull bars on the daily chart, it is a low probability sell setup.
Tomorrow’s FOMC report is a major catalyst, and it comes out at 11 a.m. PST. Hence, most traders should stop day trading around 10 a.m. Furthermore, they should then wait until at least 10 minutes after the report before resuming trading.
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.
