Emini weak weekly sell signal and China trade war
I will update again at the end of the day.
Pre-Open market analysis
The Emini gapped down yesterday. Since it again fell below last week’s low, it triggered the weekly sell signal for a 2nd time. However, it rallied from a double bottom and a test of the May 22 high. That was the breakout point for the June rally. Additionally, yesterday was the 3rd consecutive bull day in a 5 day pullback. It is unusual to have 3 bull bars as the market is falling, and this is a sign of buying pressure. Therefore, it reduces the chances of much lower prices.
Overnight Emini Globex trading
Since yesterday was a wedge rally, it was a wedge bear flag on the 5 minute chart. The bears want a break below yesterday’s bull trend line and a test of yesterday’s low. They want the 5 day bear trend to continue and to fall below the May 22 high.
However, the Emini is up 7 points in the Globex session. It might therefore gap above yesterday’s high and the 60 minute EMA. This would be a bull breakout above yesterday’s wedge bear flag. The bulls would then want a measured move up based on the height of yesterday’s wedge.
Yesterday was a bull reversal day at key support. It is therefore a buy signal bar. This increases the chances of a big bull trend day today. A bull trend day is even more likely after 3 consecutive bull days in a 5 day selloff. However, if the breakout above the wedge reverses down, today could also be a bear trend day.
Every day for the past 2 weeks has spent a lot of time going sideways. If there is a trend up or down, there will probably be a lot of trading range trading as well. Day traders need to be ready for anything today, but the odds are there will be at least one good swing trade.
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 Forex double bottom and failing oo bear flag
The EURUSD daily Forex chart has been sideways for 4 days after last week’s big selloff. The bears want this to be a 4 day bear flag. However, a reversal up from a double bottom with the May 29 low is slightly more likely.
The EURUSD daily Forex chart sold off strongly last week, but stalled at the May 29 low. The bulls want a double bottom reversal up to test the June 14 sell climax high. The odds are that the daily chart is in a trading range, even if there is one more small leg down.
The bears have consecutive outside days (outside, outside so oo pattern) after last week’s big bear day. This is an oo bear flag. But, the past 4 days have prominent tails below. The bears so far have failed to get a breakout. If today is an inside day, there will then be an iooi pattern, which is a variation of an ioi (inside-outside-inside).
That is a breakout mode pattern. If today is an inside day, it is both a buy and a sell signal bar for tomorrow. The bears want a breakout below and a measured move down based on the 100 pip height of the bear flag.
The bulls will try to get a reversal up. If today is an inside day, especially if it closes near its high, the bulls will buy above today’s high. Their 1st goal is a test of the top of the most recent sell climax. That is the June 14 big bear trend day. Its high is the neck line of the double bottom. They then want a breakout above and another test of 1.20, which is at the May 14 high.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been in a 30 pip range for the past 4 hours. Today so far is an inside day. The bulls want today to remain an inside day so that it will be a buy signal bar for tomorrow. They especially want today to close above its open and have have a big bull body. That would indicate buying pressure and increase the chances of a rally tomorrow. The bears always want the opposite. The want a bear day closing near its low, and they do not care if it remains an inside day.
After 4 days in a tight range, the odds are that today will continue to have a small range. Day traders will scalp unless there is a big breakout up or down. After yesterday being an outside day in a tight trading range, the odds favor an inside day today.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Today was a trading range day that closed near its open. It therefore was a doji day on the daily chart.
Yesterday was a reversal up from the daily EMA. Today triggered a buy signal by going above yesterday’s high. Yet, today was a doji day and therefore a weak entry bar.
The bulls hope to get above last week’s high after reversing up from below its low yesterday. If they succeed, this week will be an outside up week. That is a sign of strong bulls. Hence, it would increase the chance of a test of the March high.
The weekly chart is still on its wedge top sell signal. But, this week so far is a bad entry bar for the bears. They need much more selling in the 2 remaining days of the week, which is not likely.
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.
