Emini breakout above 2400 round number and all-time high
Updated 6:49 a.m.
The Emini broke to a new all-time high on the open. Yet, most of the past 10 days had an early selloff. Furthermore, most had early trading range price action and most were trading range days. Since the first several bars today look similar to all of the other recent days, the odds are against a strong trend day up or down. This looks like the start of another trading range day. Traders might have to wait 1 – 2 hours before a swing up or down begins.
Yet, the location is good for a trend up or down. If there are strong consecutive trend bars, traders will look to swing trade.
Pre-Open market analysis
The Emini pulled back after Friday’s bull flag breakout that tested the all-time high. The odds still favor a new all-time high since Friday’s breakout was strong. Yet, because of the unusually extreme buy climax on the weekly chart, even a strong rally will likely fail within a couple of weeks.
If the Emini fails to get above the March 1 all-time high, it will then form a double top with that high. The leg down from the March high and the leg up in April both had at least 10 bars. Therefore, if the Emini turns down from a double top, that would be a double top major trend reversal.
In general, a major trend reversal top only has a 40% chance of a swing down. However, since the weekly chart is so extremely overbought, a reversal down would have a 70% chance of a swing down on the daily chart.
Overnight Emini Globex trading
The Emini is up 3 points in the Globex session. The bars want this week’s rally to form a double top with the March 1 high. Yet, Friday’s rally was strong enough to make a new all-time high likely the week.
Because the March high and 2400 are important resistance levels, a bull breakout could lead to a quick 20 point rally over the following days. Yet, the odds still favor a reversal down within a few weeks. Consequently, traders should be ready to swing trade in a bear trend soon. However, they might have a swing up first.
Since the Emini has been in a trading range for 2 months, most days have been trading range days. That means that today, like most days, will be another trading range day. But, because the Emini is at major resistance, the bulls could get a swing up lasting several days. Since the weekly chart is in an extreme buy climax, the bears will probably get a 2 month swing down soon. While traders have been mostly scalping for 2 months, they should be prepared to sewing trade soon. Be ready for consecutive strong trend bars up or down and the start of swing trading at any point.
EURUSD Forex market trading strategies
After a 2 day bull breakout attempt, the EURUSD daily Forex chart reversed down for 2 days. This is an attempt at a reversal down from a failed breakout attempt above the bull channel and 6 month trading range. Consequently, lower prices likely. The first target is the April gap.
The EURUSD daily Forex chart has been in a bull swing for 4 weeks. After barely breaking above its 6 month bull channel and trading range, it reversed down strongly over the past 2 days.
Because the daily chart has not yet broken below below Thursday’s buy climax low and the bottom of the 3 week tight trading range, the bulls still have a 40% chance that the 2 day selloff will become a bull flag.
If the bulls are able to prevent a break below the 3 week range, they will then try to resume the bull trend up.
More likely, the reversal down over the past 2 days will lead to a test of the April gap. The top of the gap is 60 pips below the Thursday’s buy climax low. Since the 3 week range is 150 pips tall, the bears might get a 150 pip selloff from below Thursday’s low. That would close the April 24 gap up. Furthermore, it would be about a 50% pullback from the 5 week rally.
Overnight EURUSD Forex trading
The overnight EURUSD market continued yesterday’s selloff. Because the EURUSD daily chart is in a 2 year trading range and at the top of a 6 month trading range, every strong leg up or down is more likely to reverse than begin a trend. Consequently, the odds favor a reversal. However, it has not yet broken below the 3 week tight trading range. The bulls therefore still have a 40% chance that the reversal will stop at Thursday’s buy climax low and form a bull flag. More likely, this reversal will lead to a measured move down based on the 150 pip height of the 3 week trading range. That will result is the closure of the April 24 gap and a 50% pullback of the 5 week rally.
The overnight selloff was in wedge bear channel on the 5 minute chart. Furthermore, it is now at the bottom of the 3 week range. Therefore, the odds favor the end of the selling for the next several hours. In addition, the EURUSD market will probably bounce at least a 30 pips and enter a trading range today.
Since the 2 day selloff is in a tight channel, bears will sell the 1st rally. Hence, the 1st reversal up will be minor and lead to a small trading range or a bear flag. Yet, until the bears break below the 3 week range, the range could continue for several more days. That would therefore reduce the odds that the bears will close the gap. However, unless the bulls rally strongly for a day or two to reverse the 2 day selloff, the odds favor lower prices over the next couple of weeks.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
The Emini reversed down from a new all-time high and 2400 to form a broad bear channel and an outside down day.
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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.
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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.
