Emini in breakout mode at 2800 ahead of FOMC today
I will update again at the end of the day
Pre-Open market analysis
Yesterday was another mostly sideways day. Traders are waiting for today’s 11 a.m. PST FOMC announcement. The bulls want a breakout above the March high and 2800. However, the bears always want the opposite. They want a double top with that high and then a strong reversal down over the next several weeks. The odds favor the bulls, even if there is a pullback for a couple of weeks.
Day traders will trade today like any other day. But, they should stop trading before the report. In addition, the up or down breakout on the report has a 50% chance of reversing sharply within 10 minutes. Therefore, day traders should wait at least 10 minutes after the report before resuming trading.
Overnight Emini Globex trading
The Emini is up 4 points in the Globex market. Since the past few days were sideways, today probably will be in a trading range as well. However, the odds favor a breakout up or down after the 11 a.m. PST FOMC announcement today.
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 top bear flag in trading range ahead of FOMC
The EURUSD daily Forex chart reversed up to the EMA after consecutive sell climaxes. At least 2 legs sideways to up are likely over the next 1 – 3 months. The bulls have a High 2 bull flag, but today’s FOMC meeting is the more important than the chart patterns today.
The EURUSD daily Forex chart rallied strongly to resistance after sell climaxes. This is the 1st pullback to the EMA after more than 20 days and therefore a 20 Gap Bar sell setup.
But, when the pullback follows extreme sell climaxes, a minor reversal down and trading range are more likely than a resumption of the bear trend. The trading range will last at least a couple of months. Traders do not yet know if the EMA will be the top of the 1st leg up or if the leg will continue to 1.200 and the May 14 high.
Since today’s FOMC meeting is extremely important, it will probably create a breakout up or down. But, since the chart is now in a trading range, the bears will sell a bull breakout to around 1.20. In addition, the bulls will buy a 50% retracement of the 2 week rally. Furthermore, even if there is a new low, they will buy below the May low.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart reversed up from a selloff overnight. However, the range is only 40 pips. Because the 11 a.m. FOMC announcement is so important, the odds favor quiet trading into the report.
Day traders should exit all positions before the report. The breakout on the report has a 50% chance of reversing within the 1st 10 minutes. In addition, the breakout and reversal can be big and fast. Therefore, day traders should wait at least 10 minutes after the report before looking to day trade again.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
The Emini was sideways into the 11 a.m. PST FOMC announcement. It sold off to below yesterday’s low after the report, creating an outside down day. After a failed rally, it closed below yesterday’s low.
The Emini has a 5 day parabolic wedge top on the daily chart. Today was an outside down day, and it closed above yesterday’s low. It is a sell signal bar for tomorrow. If tomorrow is a big bear trend day, the Emini might trade down for the next couple of weeks.
The bears want the week to close below the open to create a bear body on the weekly chart. In addition, they would like the week to trade below last week’s low. That would be an outside down week and a sign of strong bears.
The odds still favor a gradual move to a new high. However, the odds are that there will be several 2 – 3 week selloffs along the way. This might be the start of one. However, unless there is a strong selloff, the odds are that the Emini will break above that high within a couple of months.
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.
