Emini failed bear breakout below ioi pattern in bull channel
Intraday market update: Thursday August 16, 2018

Emini failed bear breakout below ioi pattern in bull channel

I will update again at the end of the day.

Pre-Open market analysis

Yesterday gapped down and sold off early, but reversed up from the March high. That is the top of the 7 month trading range. Yesterday was therefore a reversal day and it is now a buy signal bar for today. However, it has a bear body and the August 2 buy climax low is a magnet below. The correction still might test a little lower.

With yesterday’s reversal, the Emini might have completed its pullback from the August high. If today gaps up or rallies strongly above yesterday’s high, then the bull trend on the daily chart is likely resuming. Without that, the odds still favor a test of the August 2 low below 2800 within a few days before this pullback ends.

Overnight Emini Globex trading

The Emini is up 13 points in the Globex market. It will therefore gap above yesterday’s high. This will create a 1 day island bottom. Since yesterday was a Breakout Test of the March high in a bull trend, it might be the end of the pullback. Therefore, there is an increased chance of a big bull trend day today. In addition, if the bull trend is resuming, there might be several consecutive bull trend days.

Last week was a small, weak sell signal bar on the weekly chart in a bull trend. This week triggered the sell signal by trading below last week’s low. If the bulls get a strong rally today, last week’s high will be a magnet by tomorrow’s close. The bulls might be able to create a rally to above that high. That would turn this week into an outside up week, which would be a sign of buying pressure.

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 parabolic wedge sell climax and minor trend reversal

The EURUSD daily Forex chart reversed up yesterday after a parabolic wedge sell climax. Since yesterday was a doji, it is a weak buy signal bar after a strong bear breakout. Today so far is a small reversal bar for the bulls. This is probably going to be a minor reversal.

The EURUSD daily Forex market fell over the past 3 weeks in a parabolic wedge sell climax to far below its 20 day EMA. The bears are taking some windfall profits and will look to sell closer to the average price.

The 3 month trading range was late in a bear trend. It therefore will probably be the Final Bear Flag. This means that the breakout will likely reverse up for several months back into that trading range. However, there is no clear bottom yet.

Yesterday was a doji, which is a weak buy signal bar. In addition, the momentum down is strong. Finally, there is room to the 1.12 measured move target below. Therefore, any rally over the next 2 weeks will more likely be a test of the breakout point at 1.15 and the EMA than a major reversal. The odds favor lower prices.

The bear trend could resume tomorrow because today might form a small double top bear flag with Monday’s high. More likely, the daily chart will continue the 4 day trading range for at least several more days. It probably will soon rally 150 – 200 pips up to resistance before resuming down.

Weekly chart forming minor reversal

The weekly chart is forming a minor reversal. However, after 3 big bear bars, the odds favor at least one more small leg down to the measured move target. Therefore, if there is a reversal up next week, it will probably only last 1 – 3 weeks. The bulls need several consecutive strong trend bars on the weekly chart to reverse the selloff. That is unlikely without at least a micro double bottom.

Overnight EURUSD Forex trading

The EURUSD 5 minute Forex chart rallied 100 pips above yesterday’s low. The top of the most recent sell climax is Monday’s high, which is just below 1.1450. That is the magnet above. Since the daily chart fell in a parabolic wedge, the odds favor at least 2 legs up on the 5 minute chart. Therefore, day traders will look to buy a 50% selloff from the 2 day rally.

The bears know that the 4 week tight bear channel on the daily chart is unlikely to reverse into a bull trend without at least a small double bottom. They therefore will bet that this 2 day rally is a minor reversal. Since they expect a test down, they will sell rallies to resistance. Consequently, they will look to sell a 2nd leg up to around 1.1450 over the next couple of days.

Because a sell climax usually leads to a trading range, the bears will be quicker to take profits. For day traders, that means swing trades up and down will be 30 – 50 pips.

Since the chart is probably going to go sideways for several days, there will be lots of scalping opportunities up and down.

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 gapped up and rallied in a Small Pullback Bull Trend. But, it was unable to close the gap below Thursday’s low and reversed down in the middle of the day. The reversal down was big enough to create confusion. That increases the chance of a trading range tomorrow.

Tomorrow is Friday and the closest weekly magnet is the open of the week. This week so far is a doji. Less likely, the bulls will rally 20 points to get above last week’s high and create an outside week.

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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