Emini buy climax weekly and daily sell signal above 2500
Updated 6:46 a.m.
Today opened at the bottom of the 5 day tight range. It formed an outside up bar on the 2nd bar, and therefore a micro double bottom at the bottom of the range. Yet, the bar was a bear doji. Limit order bulls and bears made money in the 1st 10 minutes. This is a trading range open and a continuation of the 5 day trading range. It therefore increases the chances of another mostly trading range day.
Because there is a sell signal on the weekly chart and two weeks ago was a strong rally, there is an increased chance of a selloff this week. However, the bears need a strong breakout and follow-through before traders will believe that a bear trend has begun on the 5 minute chart.
A trading range open can last 1 – 2 hours before the Emini decides on the direction of the breakout. The range can continue all day, like Friday. Traders are currently scalping, waiting for a breakout up or down. While the odds slightly favor the bears this week, they need a strong breakout, and there is no sign of that yet.
Pre-Open market analysis
By falling below Thursday’s low, the daily chart on Friday triggered a sell signal. Yet, the signal bar had a big tail and was therefore week. In addition, Friday was not a big bear trend day. Hence, it was a weak entry bar for the bears. In addition, because it was a small bull day, Friday is a buy signal bar. Yet, after 4 doji days at the top of a buy climax, the odds are against the Emini from going much higher. It will likely pull back for at least several weeks first.
Last week was a small bear bar on the weekly chart. It is therefore a sell signal for this week. Yet, because the weekly chart is in a tight bull channel, any reversal down will probably be minor.
The weekly and monthly charts have extreme buy climaxes. Hence, the odds are that the Emini will fall 100 – 200 points over the next 2 months. Yet, because most reversal fail, the odds are against a move below last week’s low being the start of the correction. Because the buy climaxes are extreme, the up side is small. Therefore the Emini will probably be mostly sideways to down for a couple of months.
Overnight Emini Globex trading
The Emini is down 2 points in the Globex market. Since the past 5 days have been trading range days in a tight trading range, that is likely again today. This is true even though Friday is a buy signal bar on the daily chart and last week is a sell signal bar on the weekly chart.
Because last week is a sell signal bar on the weekly chart, last week’s 2494.00 low is a magnet this week. Since that is only 2 points below the Globex low, the odds are that the bears will break below it today or tomorrow.
However, last week was also a doji bar. It is therefore a weak sell signal bar. Yet, the weekly and monthly charts are so extremely overbought. Hence, there is an increased risk of a 100 – 200 point correction beginning soon. Therefore, despite the weak sell signal bar on the weekly chart and the 8 doji bars on the daily chart, there is an increased chance of a big bear today this week.
While traders will be mostly looking for scalps because of the 5 day tight trading range, the will switch to swing trading if the Emini begins to trend down below last week’s low. Less likely, it will break above Friday’s high. If it rallies strongly, they will buy for a swing up, even though the Emini would become even more overbought.
Friday’s setups
Here are several reasonable stop entry setups from Friday. I sometimes also show limit order entries and entries on the close of bars.
EURUSD Forex market trading strategies
The daily EURUSD Forex chart is in a triangle after forming a wedge top at the 1.2000 big round number. In addition, the triangle is a head and shoulders top. Furthermore, it is after a buy climax and at the added resistance of the bottom of the monthly trading range.
The EURUSD Forex market has stalled for a month at the bottom of a 7 year trading range on the monthly chart. In addition, the daily chart had a wedge top form the August 17 low. That low is now a magnet for any reversal down. The bears are likely to get there within a month or two, even if the bulls get one more new high first.
Once there, the bears will try to break below and create a measured moved down. More likely, the daily chart will bounce from that support and form a taller trading range. However, trading ranges have legs up and down. As a result, the rally from the August 17 low will probably fail and then test that low again. Consequently, the bears would then have a right shoulder of an even larger head an shoulders top. The breakout mode process would then start over.
In conclusion, as strong as the rally has been this year, the month long trading range will probably grow both in price and time. The likely minimum height will probably be 400 pips, and the duration will probably be at least another month or two. The EURUSD daily chart is now in the middle of the range. Therefore it will probably go lower before going much higher.
Overnight EURUSD Forex trading
The 5 minute chart sold off 60 pips in a tight bear channel over the past 7 hours. Since the channel is tight, the 1st reversal up will probably be minor. Therefore, the best the bulls can probably get over the next couple of hours is a trading range and not a bull trend.
Yet, even though the selloff has been strong, it is now at the bottom of the month long trading range. Since trading ranges have inertia, most breakout attempts up and down fail. Consequently, a bounce here is more likely than a bear breakout, even though the odds favor one of these selloffs breaking below the bottom of the range. The range is a head and shoulders top. If the bears get a strong breakout, the odds would favor a measured move down to the August 17 low.
Since the overnight momentum is strong and the daily chart is likely to get down to below 1.1700, there is an increased chance of a bear trend day today. In addition, when a bear channel on the 5 minute chart is tight like this, usually the 1st rally will become either a bear flag or the start of a trading range. Because the chart is a support, the odds favor a bounce and then a trading range today.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
The Emini sold off in a parabolic wedge sell climax. In addition, by falling below last week’s low, it triggered a weekly sell signal. The sell climax was just a sell vacuum test of the August 8 high, which was a breakout point on the daily chart. After two higher low major trend reversals, the day closed above the open. It therefore was a reversal day.
The Emini collapsed down to the August 8 high, but reversed up strongly twice. This created a double bottom. Furthermore, it triggered a sell signal on the weekly chart by falling below last weeks low. The reversal up traded back above last week’s low. Yet, if it falls below the low again, it would be a 2nd entry sell signal on the weekly chart. That would have a higher probability of leading to a swing down.
However, the Emini has been in a tight range for 2 weeks, and there is no sign that it is about to breakout up or down. Even if they are successful and the Emini rallies to a new high, the weekly and monthly charts have buy climax. Consequently, the odds are against much higher prices. In addition, the Emini will probably fall 100 – 200 points over the next 3 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.
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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.
