I posted this chart after the close, showing all of the day’s Emini price action, including the failed weekly buy signal that occurred 20 minutes into the day. The Emini reversed down after triggering a high 1 buy signal on the weekly chart. The wedge bottom at 7:20 am PST failed, and the market fell for a measured move and a stronger bottom at 7:55. The rally failed again at the moving average, and the Emini fell to another measured move target, where it formed the low of the day. The stock market became always in long again on the breakout and follow-through at 9:35. The target for the bulls was a move back into yesterday’s tight trading range, which is a magnet, and it was briefly achieved at 11:20 am. The market entered a tight trading range for the rest of the day.
Posted 8:08 am PST.
The most important price action in today’s intraday update is the failed weekly buy signal and then the strong trend reversal down from just below the top of the 60 minute wedge. This was followed by a bull opening reversal attempt at the 60 minute moving average.
Yesterday was a small day, so with today opening within yesterday’s range, there was about a 50% chance that today would become an outside day. The weekly high 1 (pullback buy signal) buy triggered on the third bar of the day when the market went above last week’s high. However, the breakout failed and the market then reversed down and had a strong bear breakout.
The market reversed up strongly at 7:55 am PST, forming a parabolic wedge bottom and a possible low of the day at a bull trend line, the 60 minute moving average, and a measured move down, but the bulls will need follow-through buying. The bulls want a reversal back up to the open of the day and the bears want a bear trend day. Since the buy signal bar was strong and the context was good, it is reasonable to swing a long. Also, yesterday was a tight trading range and it is therefore a magnet today.
The bears see this reversal attempt as a bull trap and are selling it, expecting it to fail. At the moment, there is a 50% chance that this is the low of the day. If the bulls are able to get a strong bull breakout or a series of consecutive bull bars, the probability will become higher. The bears also need a strong bear breakout with follow-through.
See Monday’s weekly chart update for a discussion of the weekly chart.
Traders can see the end of the day bar-by-bar 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.
I sometimes refer to bar numbers (there are 81 five minute bars each day) instead of times on the 5 minute. When I mention time, it is USA Pacific Standard time (the market opens at 6:30 am PST, and closes at 1:15 pm PST). Background information on this report can be read on the Intraday Market Update page.
