Trump rally breakout of 2400 should fail within 2 weeks
Updated 6:52 a.m.
The Emini reversed down from above yesterday’s high and is Always In Short. Yet, the bulls want an opening reversal up from the moving average. They need a strong break to a new high of the day. At the moment, the best the bulls will probably get is a trading range for the 1st hour or two.
The bears want a trend from the open bear trend, but they need a strong break below the moving average. Since the 4th bar is a bull bar, the selloff is more likely a leg in a trading range for the 1st 1 – 2 hours.
If there is a trend day, a bear day is more likely. Because the bulls have been so strong over the past few weeks, and there was a bull bar on the 4th bar today, the odds at the moment are against a strong bear day. A trading range open is more likely.
Pre-Open market analysis
The Emini rallied early yesterday to a new all-time high. Furthermore, it broke above 2400 for the 1st time. Yet, it went sideways in a tight range for 5 hours. This was therefore Breakout Mode. Sometimes a strong breakout does not begin until the next day, which is today. The bulls want a resumption of yesterday’s early rally. But, the bears want a reversal down. No matter what happens today, the odds still favor a 100 point selloff beginning anytime within the next few weeks.
Overnight Emini Globex trading
The Emini is up 4 points in the Globex session. While the market is hesitating around 2400, it is in wedge channels on the 60 minute and daily charts. The tops of those channels are around 2410, which is therefore a magnet. Since most days over the past month have been trading range days or have spent a lot of time in a trading range, that will probably continue today. Yet, because the Emini is at important resistance, there is an increase chance of a strong bull breakout or a strong reversal.
EURUSD Forex market trading strategies
The daily EURUSD Forex chart has 3 consecutive strong bull trend bars. This strong momentum makes higher prices likely.
The EURUSD daily chart rallied strongly for 3 days. The bulls are therefore getting a resumption of the rally that broke above the 6 month trading range. Consequently, traders will look for resistance above as magnets.
There are many ways to create measured move projections. Projections from the head and shoulders bottom are above the November 9 top of the strong bear reversal.
While the rally will have pullbacks, the bears probably cannot create a reversal until they at least create a micro double top. If they create one at today’s high over the next few days, they will also have a small expanding triangle top. Yet, the momentum up is so strong that a rally up to the measured move targets and probably the November 9 high is more likely.
Overnight EURUSD Forex trading
The 240 minute chart has rallied 200 pips with no more than a 30 pip pullback. Consequently, the rally is strong. Therefore the odds are that it will continue, even if there is a 50 – 70 pip pullback over the next few days. The November 9 high is the start of a strong selloff. Its high is therefore important resistance. Hence it is a magnet. It is close enough and the momentum up is strong enough so that the EURUSD will probably test it within a couple of weeks.
Because the 3 day rally covered 200 pips, it could have a 50 – 100 pip pullback at any time. Yet, bulls will buy the reversal down. Therefore the downside risk is small over the next few day. Yet, because the rally is climactic, it is likely to convert into a 1 – 3 day trading range soon. But, that will more likely be a bull flag than a bear trend reversal.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
After 2 attempts to break above yesterday’s high, the Emini sold off. It reversed up from a parabolic wedge bottom at the 60 minute moving average and formed a trading range day.
The Emini reversed down from a new all-time high, and a 3rd push up on the daily chart. Today therefore is a sell signal bar for a wedge higher high major trend reversal. Since picking an exact top is a losing strategy, bears can buy puts. Bears wanting higher probability will wait to sell after a big bear breakout. The bulls see a channel top around 2410 and will continue to buy reversals down.
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.
