Emini bull reversal bar before Trump’s tax cut and budget votes
Updated 6:44 a.m.
While yesterday was a bull reversal day, it was in a 2 week trading range and therefore there is nothing to reverse. Today opened in the middle 3rd of yesterday’s range, which increases the chances of a lot of overlap. Overlap increases the chances of a trading range day. In addition, yesterday had a big range.
With today in the middle 3rd of yesterday, there is an increased chance of an inside day today. Inside days are usually trading range days. Unless there is a strong breakout above yesterday’s high, which is unlikely, today will probably be a trading range day. It is now deciding on the direction of the 1st leg.
Pre-Open market analysis
Yesterday reversed up from the 20 day moving average and just above last week’s low. Since it was a doji bar, it is a weak buy signal bar for a double bottom with last week’s big bull doji bar. The Emini has been sideways for 2 weeks and trading range trading is therefore likely today.
Today is Friday so weekly support and resistance are magnets, especially in the final hour. The open, high, and low of the week are all within reach.
Overnight Emini Globex trading
The Emini is down 6 points in the Globex session. It has been in both a wedge top for a month and a tight trading range for 2 weeks. There is no sign of a breakout up or down yet. Since yesterday was a big reversal day, it was a Big Down, Big Up pattern on the 5 minute chart. This means Big Confusion, which is a hallmark of a trading range. Therefore, today will probably have a lot of trading range trading. This is especially true since yesterday was a big doji bar on the daily chart, which is a one day trading range. Furthermore, today is Veterans Day and therefore trading might be light.
The bulls want a breakout above the wedge top. The bears want the 2 week trading range to form a head and shoulders top on the daily chart. The daily chart is therefore in breakout mode.
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 daily EURUSD Forex chart has a head and shoulders top, but the wedge bull flag is more important.
The EURUSD daily Forex chart has been in a trading range for 4 months. It had a breakout below the range on October 26, but there has been no follow-through selling. The trading range is also a lower high major trend reversal and a head and shoulders top.
Like all tops that have a bear breakout, there is a 60% chance that the breakout will fail. The breakout was strong enough so that the bears might get 1 more small leg down before the market reverses up. The reversal up so far looks like another small leg in the 3 week tight trading range. The bulls need a big bull trend bar before traders will conclude that the chart is reversing the October 26 bear breakout.
The odds are that they will get it within a few weeks. Yet, trading ranges disappoint bulls and bears. While a 50% pullback from the 3 month selloff is likely, the rally will probably stall in the middle of the range at around the October 12 major lower high. Consequently, the 4 month trading range is likely to continue for at least another 1 – 2 months.
Overnight EURUSD Forex trading
The 5 minute chart has been in a 40 pip range overnight, with no significant follow-through buying after yesterday’s rally. This was likely because the daily chart has been in a tight range for 3 weeks. Trading ranges have inertia, which means they are more likely to continue than to successfully break out. Consequently, the odds favor another small, scalping day.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Today was a small day, and therefore the late bull breakout was likely to fail. The day began with a double top bear flag, and then a wedge bull flag. It was also a 50% pullback from yesterday’s rally.
Today was a small day. There was a deep pullback to a new low after a 7:20 a.m. opening rally. That bear breakout failed and the day then became a small day. It remained Always In Long. It got a late bull breakout, but could not reach the open of the week. The day was an inside day. Since it is a bull bar above the moving average, it is a buy signal bar for next week. The week was a doji week. Both the day and week are neutral going into next week.
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.
