Trump buy climax rally is near 2500 S&P resistance
Updated 6:46 a.m.
The Emini gapped down, but reversed up at the 60 minute moving average. The bulls see this as a High 2 pullback from Friday’s rally. Additionally, it is an Opening Reversal up from the 60 minute moving average. Their 1st goal is to close the gap below yesterday’s low.
The bears want the 2 day double top to lead to a bear trend. They will therefore try to create an Opening Reversal down from the 5 minute moving average.
Because the bulls and bears both have reasonable arguments on the open, today is like most days over the past month. Hence, this increases the odds of a trading range for the 1st 1 – 2 hours. Furthermore, this confusion reduces the chance of a strong trend day. Traders are trying to decide on the direction of the 1st swing. Like yesterday, unless the swing is very strong, the odds are that it will reverse to an opposite swing after 2 – 4 hours.
Pre-Open market analysis
Yesterday was a trading range day after Friday’s buy climax and reversal. It is therefore a High 1 buy signal bar on the daily chart. Yet, the weekly chart is so extremely overbought, bears will begin to sell new highs. Consequently, bulls will look to buy pullbacks more than breakouts.
Yesterday is also a sell signal bar for a failed breakout to a new all-time high. Because the 3 day rally was strong, many bears will only take a 2nd entry sell signal. Therefore, there will probably be buyers below yesterday’s low. This is true even though the Emini is probably creating a top for the next 3 months.
Despite Friday’s small pullback bull trend, 3 of the past 4 days, and most of the days of the past month, have been trading range days. That is therefore what is most likely again today.
Overnight Emini Globex trading
The Emini is down 5 points in the Globex market. The bulls are hoping that this will form the 2nd leg down in a 2 day bull flag. However, the bears want the pullback to grow into an Endless Pullback and then into a bear trend.
The overnight selloff created a micro double top with Friday’s high. This is the minimum that the bears need to begin a correction. If they get 3 consecutive bear bars on the daily chart, the odds will shift in favor of the bears. That would make it likely that the move down to below the weekly moving average was underway.
Since most days over the past month have been trading range days, that is what is most likely again today. Yet, the weekly buy climax is so extreme that traders need to be ready for a strong bear trend day, and then a series of bear trend days.
While bulls have been buying every sharp selloff for the entire year, that will soon stop. Once the daily chart converts into a bear trend, the bears will begin to get follow-through selling for several days after big bear days.
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 market trading strategies
The monthly EURUSD Forex chart has rallied for 5 months. The bears will probably need at least a micro double top before getting a reversal. Therefore,
the downside risk is small for at least 2 months. The bulls want a breakout above the bottom of the 10 year trading range.
The EURUSD Forex chart is at the top of a 30 month trading range. In addition, it is just below the bottom of a 10 year trading range. It is therefore testing resistance.
The current 4 month breakout has been strong. There is therefore about a 50% chance of a break above resistance. Yet, since most breakouts fail, the odds are against a successful reversal up into a bull trend. Furthermore, the 4 consecutive bull bars are relatively small and are not increasing in size. Hence, more likely, the rally will just lead to a taller 30 month range.
240 Minute Chart
The 240 minute EURUSD Forex chart was forming a wedge top. Yet, the rally last night broke strongly above the 2nd top of the wedge. Consequently, the wedge top is now less likely. Instead, the bulls will buy the 1st reversal down. Therefore, there will probably be at least one more leg up. Hence, the bears will need at least a micro double top.
The bulls want any pullback to stay above the July 11 1.1488 high. They therefore are hoping for a measuring gap based on the 170 pip tall 3 week wedge. If they are successful, the rally will be at the top of the 30 month trading range.
Overnight EURUSD Forex trading
The 5 minute chart has been in a 20 pip range for 3 hours. In addition, the rally on the 60 minute chart has had as series of buy climaxes and then bull flags. This usually leads to a trading range.
Yet, the overnight break above the potential wedge top was strong. The odds are that bulls will buy the 1st 50 pip pullback. This is because when the momentum up is this strong, the bears usually need at least a micro double top.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
The Emini reversed up strongly from the 60 minute moving average. It then entered a weak bull channel.
The low was a lower low major trend reversal.
After the Emini reversed up strongly, it traded in a weak bull channel. The odds still favor higher prices. Today might have been the end of the pullback from last week’s strong rally. Today is a buy signal bar on the daily chart for tomorrow.
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.
Hi Al,
Was the #8 bar a bull flag off the open and 60 ma buy setup?
Thanks
It was a High 1 bull flag and a 2nd reversal up from below yesterday’s low, but after 3 bear bars and only a weak rally on the open, sideways was more likely.