Emini island bottom reversal up to 2800 by May
I will update again at the end of the day
Pre-Open market analysis
The Emini sold off early yesterday and then reversed up. It then spent most of the day going sideways. While the bulls hope for a series of bull days with higher lows and highs, the odds are against it. The Emini has been in a trading range for 3 months. Therefore, the odds favor some disappointment for the bulls. An example would be a 2 – 3 day pullback. However, the breakout above the 4 week trading range was strong. The odds are that bulls will buy any pullback. Furthermore, this rally will probably test 2800 within a month.
Overnight Emini Globex trading
The Emini is down 6 points in the Globex market. After 3 days in a tight trading range, the odds favor a sideways to down day today. Furthermore, the Emini did not break strongly above the 2700 Big Round Number. It will probably test it today. The bulls want a strong reversal up from that support. However, because the daily chart has been in a trading range for 4 months, the odds are against a sustained strong move up or down. Yet, the month-long rally will probably work its way up to 2800 over the next month.
The past 7 days have been mostly trading range days. Therefore, today will likely be mostly sideways as well. But, the daily chart is still in a trading range. Therefore, there is an increased chance of disappointed bulls. This means that a big bear day can come at any time.
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 at apex of triangle so breakout likely within a week
The EURUSD daily Forex chart is at the apex of a triangle and therefore in breakout mode. It probably will test the top off the triangle within a couple of days.
The EURUSD daily Forex chart has been sideways for 4 days. It is at the apex of a 3 month triangle and in a 4 month trading range. Since it is only about 30 pips from the bear trend line, it probably cannot escape the magnetic pull of that resistance. Therefore, it will probably touch the line within a few days.
The bulls want a breakout above the triangle and then above the March 27 major lower high. However, the bears want a break below the April 6 major higher low. While the bulls have a slightly greater chance because the weekly chart is in a bull trend, the daily chart would not be doing what it is doing if traders believed that the bulls had a big advantage.
The 1st breakout of a triangle reverses 50% of the time. Therefore, traders want to see consecutive strong trend bars up or down before they believe that the breakout will succeed.
Even after the triangle breakout, the daily chart will still be in its 4 month trading range. Traders need to see consecutive strong trend bars above the February 16 top of the range or below the March 1 bottom of the range. Until that happens, the odds are that every strong move up and down will reverse. Simply look to the left to verify that this is true.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been in a 50 pip range overnight. In addition, it has been in a tight trading range for 4 days. Consequently, day traders are scalping for 10 – 20 pips. However, they know that a breakout is likely within a few days. They need to see 2 – 5 big trend bars on the 5 minute chart that break out of the 4 day range before they will begin to swing trade.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
The Emini sold off from a wedge bear flag at the moving average. It reversed up around 10:30, making it a bull reversal day. In addition, it was a trending trading range day.
The bulls had many big bull bars closing on their highs in the 1st hour. That made the bear trend likely to reverse up, which it did midday. The pullback on the daily chart might last a few more days, but the odds are that the bull trend will then resume.
By gapping down today, the bears created a 2 day island top. That partially negates the 3 week island bottom. The odds still favor higher prices over the next month.
Tomorrow is Friday and the open of the week is a magnet. The bears want a close below the open. That would make this week a bear bar on the weekly chart. It would therefore be a sell signal bar for next 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.
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.
