Emini buyers below last week’s sell signal bar
I will update again at the end of the day.
Pre-Open market analysis
I have been saying for the past week that the bears would get a 50 – 100 point pullback over the next couple of weeks, and then the Emini would resume up to a new all-time high. Yesterday’s low was a little more than 50 points down from last week’s high. However, yesterday reversed up to above Wednesday’s high and was therefore an outside up day. Since Wednesday was an outside down day, yesterday was especially bullish. Furthermore, yesterday formed a micro double bottom above the 20 day EMA. This is a bull flag.
The bulls need some follow-through buying today. If they get it, then they will probably break to a new all-time high within a few weeks. If they do not get it, the Emini might stay sideways for a couple more weeks. The minimum that the bulls need is the absence of a bear body. Because yesterday was climactic, today will probably be more of a trading range day. If the Emini is below the open in the final hour, look for a rally to above the open.
The Emini has probably begun a move back to a new all-time high. But, the bulls 1st need to break above last Friday’s high. That was the top of a 2 day sell climax. The odds were that there would be a 2nd leg down. Yesterday might have been that 2nd leg down. But, if the rally stalls at Friday’s high, the bears will sell, expecting a test below today’s low.
On the weekend, I said that last week was a sell signal bar on the weekly chart for a failed breakout above the March high. Since it had a bull body, I said that there would probably be more buyers than sellers below, even if the pullback lasted a couple weeks. Yesterday traded below last week’s low only for the first few minutes of the day. The day then rallied in a strong Trend From The Open bull trend.
Overnight Emini Globex trading
The Emini is up 1 point in the Globex session. While the bulls would like a strong bull trend today, they have only a 25% chance after yesterday’s buy climax. Today will probably have at least a couple hours of sideways to down trading that starts by the end of the 2nd hour.
The odds favor at least a small bull body on the daily chart. Therefore, if the Emini is below the open in the final hour, the bulls will buy, expecting a rally back above the open.
The odds are against a strong bear trend after such a strong rally. Therefore, the bulls will look to buy a reversal up from any 2 – 4 hour selloff.
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. My goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not in a position at the moment, these entries would be logical times for him to enter.
EURUSD Forex bear leg near bottom of trading range
Today is the 4th day in a bear leg near the bottom of a 2 month trading range on the EURUSD daily Forex chart. Since reversals are more common than breakouts, the chart should turn up over the next few days.
The EURUSD daily Forex chart has been in a trading range at support for 2 months. What had been a triangle is evolving back into simply a trading range. The bears want the past 4 days to be the start of a breakout and a 300 pip measured move down. However, there have been many strong legs up and down and all led to reversals. That is what is likely over the next few days.
The bulls see the 3 legs down from the July 23 high as a wedge pullback in the trading range. Because yesterday was a big bear day, the bulls will probably need a micro double bottom before they can get a bull leg in the trading range.
Since the 3 bear bars have increased in size, the selling is gaining momentum. Therefore, the 1st reversal up over the next few days will probably stall at the EMA. Traders will look to see if a small double top bear flag forms just below the EMA. If so, swing traders will short, hoping for a bear breakout of the trading range after this 4 day breakout below the triangle. Like all breakout attempts, the probability would be low, but the risk/reward would be good enough to make the math work.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart had a 50 pip reversal up overnight. But, the 4 day selloff was in a tight bear channel. Therefore a trading range is likely for a couple of days. The bears will sell rallies between 1.1600 and 1.1650 for scalps. Some will also hold part of their position for a swing down after the break below the triangle on the daily chart. They will take a chance that this is the start of a 300 pip selloff below the May low.
Since a strong bull trend is unlikely today, the bulls will buy pullbacks for scalps.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Here are several reasonable stop entry setups for today. I sometimes also show limit order entries and entries on the close of bars. My goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not in a position at the moment, these entries would be logical times for him to enter.
Yesterday was an outside up day after an outside down day. By going above yesterday’s high, the Emini triggered a buy signal today. While it was not a big bull day, it did provide good follow-through buying. It therefore increased the chance of a new all-time high within the next couple of months. It might even come 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.
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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.
