Posted 7:09 a.m.
Although the Emini sold off on the open, there was a lot of two-sided trading within yesterday’s trading range. This is a trading range open and it increases the chances of a lot of trading range price action today. The bulls want a double bottom with yesterday’s low or a failed breakout below yesterday’s low. The bears want a strong breakout below yesterday’s low with follow-through. Since this is trading range price action so far, the odds are that both the bulls and bears will be disappointed and that each rally and selloff will more likely be a leg within a trading range instead of breakout and the start of a trend.
Although the Emini is currently Always In short, the Emini is mostly neutral. Daytraders are looking for a sign that either side is in control. Without that, they will continue to buy low, sell high, and scalp. The bulls are looking for a buy signal bar closing on its high. The bears want a sell signal bar closing on its low. Alternatively, they are waiting for a strong breakout with follow-through before they will swing trade. Until then, traders will trade this like a trading range day, and they will pay attention to weekly and monthly support and resistance, especially at the end of the day.
My thoughts before the open: Candlestick pattern is a buy signal bar on the daily chart
The S&P Emini futures contract is down a little in the Globex session. Yesterday was mostly a trading range that consolidated the gains from Wednesday. The bears want this rally to form a 60 minute lower high major trend reversal. The bulls want a breakout to a new all-time high. Today is the last day of the week and of the month, and the Emini is about 20 points below the all-time high. This might be too far for the Emini to get there today, given its trading range yesterday.
Because yesterday was in a trading range and the Emini is just below the high, the odds favor more trading range price action today. The Emini often is drawn to weekly and monthly support and resistance when those bars are about to close. Last month’s high and last week’s low and this week’s open are all within reach and are magnets today.
As always, online daytraders will watch for a strong breakout with follow-through up or down. Because the Emini is in a trading range on all time frames, most breakouts will fail to have much follow-through, and daytraders will be quick to take profits and to look for reversal trades. The price action strategy today is to expect more trading range price action.
Yesterday was a bull inside bar on the daily chart in a bull trend after a strong bull day on Wednesday. This candlestick pattern is a buy setup, and the bulls will try to create a breakout above yesterday’s high and then rally to a new all-time high. The odds are against it, given the weak Globex session. More likely, the Emini will close the week around the week’s open and create a doji candlestick pattern on the weekly chart.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
The S&P Emini futures contract had swings down and up today, and formed a trading range day
The Emini tried to get down to the low of the week and then the high of the week, but failed in both attempts. Instead, it ended up closing around the midpoint of the week. The monthly candlestick pattern was a small breakout, with the month closing around the February and March highs, and above the April close. The 60 minute chart formed a high 2 buy setup today, which triggered at the end of the day with a weak entry bar. The Emini had a neutral day in an overbought bull trend on the higher time frames, but it is still a bull trend and it and it is close to a new all-time high.
Best Forex trading strategies
The 60 minute EURUSD is still in a weak rally between the March/April and May trading ranges, and it will probably form a trading range around the current level to fill in the gap between the two other ranges. The bears see this week’s 60 minute rally as a wedge bear flag. The bulls see it as an early bull channel, and want to get a bull breakout above the wedge bear flag so that they then could get a measured move up to the bottom of May’s trading range around 1.1080.
A weak rally means that it is basically a trading range that is sloped upward. Online daytraders learning how to trade the markets have to be careful trading this. It is a limit order market on the 5 minute chart, which means traders are selling above prior highs and buying below lows and looking for scalps. Although it is a high probability Forex trading strategy, it is difficult Forex trading for beginners because it is better if a trader has the ability to scale into positions.
Scaling in is a dangerous form of online currency trading unless a trader has enough experience between what will become a failed breakout or a successful breakout. Beginners should instead look for reversals with stop entries, or wait for strong breakouts with follow-through.
The USDCAD is in a bull trend on the 60 minute chart, but it is overbought and entering a trading range. Daytraders will look for a reversal down from the current test of yesterday’s high. There was a strong bull breakout at 5:35 this morning, but the follow-through has been bad. The bears will try to create a double top. The bulls need to break strongly above yesterday’s high. Since yesterday’s selloff was strong, the odds are that the bull breakout attempt will fail and that the 5 minute chart will form a big trading range.
The 60 minute EURJPY is testing the top of its month long trading range, which means that it should test down soon.
The GBPUSD is stair-stepping down so bulls will buy new lows for scalps and bears will sell rallies to the middle of the last bear leg for scalps and swings. The 60 minute chart is in a big spike and channel bear trend, which means that it should rally and form a trading range soon.
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, and a 2 day free trial is available.
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.
