I posted this chart after the close. The Emini sold off again from above last week’s high. However, the bear trend on the open looked more like a bear leg in what would probably become a trading range, which was the case. The bulls bought the wedge bull flag for the low of the day, and then the Emini became a small pullback bull trend. It closed near the open and formed a doji bar on the daily candle chart.
Posted 8:06 am PST.
The most important price action in today’s intraday update is the second failed breakout attempt to get above last week’s high. Last week’s candle is a breakout pullback buy signal bar. The market gapped above last week’s high and had a trend reversal down, and it began as a trend from the open bear trend. However, the lack of big consecutive bear trend bars increases the chances that this will be a bear leg in what will probably be mostly a trading range day.
At 7:55 am PST, there was a bear breakout and follow-through, which increases the chances of a measured move down and a test of yesterday’s close and the 60 minute moving average. However, there was only one strong bear bar all day, and this makes a trading range day more likely. Bulls can wait for a second entry buy or for a strong bull breakout to buy. Bears have to be careful shorting too low because a trading range is likely.
Last week was the first pullback in a 10 bar bull microchannel on the weekly chart. That means that yesterday triggered a weekly high 1 buy signal, and that this week’s candle on the weekly chart is the entry bar. Yesterday pulled back immediately, but today the bull trend resumed with the gap up and the breakout again above last week’s high. The big gap up was followed by a small trading range, as is usually the case, and the stock market was in breakout mode.
For traders using the daily or 60 minute chart, today is a great location for a short trade because the stock market is at a double top. The risk is small and the reward is very big, and that more than offsets the low probability. Traders wanting high probability will wait for a strong bear breakout.
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.
