Emini testing 2800 top of 6 month trading range
I will update again at the end of the day.
Pre-Open market analysis
Yesterday was a small bull day. It therefore was follow-through buying after Friday’s breakout above June’s bear channel. This increases the chance of a test of the June 13 high of 2796.00 and the March 11 major lower high of 2811.00.
However, without a strong breakout above that March high, this rally is just another leg in a 6 month trading range. Because the 5 day rally is strong, the bears will need a micro double top before they can create a bear leg. Consequently, the bulls will buy the 1st reversal down.
Less likely, today will be a bear day and then tomorrow will gap down. That would create a 2 day island top. But, after 3 strong bull days, the reversal will probably not fall far before the bulls buy again.
Overnight Emini Globex trading
The Emini is up 3 points in the Globex session. If today gaps up, the gap will be small. Small gaps usually close in the 1st hour.
Yesterday was a gap up, but the daily chart has been in a trading range for 6 months. Therefore, there is an increased chance of today reversing yesterday’s bull trend. If so, then there would a 2 bar reversal on the daily chart. Traders would then look for a gap down tomorrow. That would form a 2 day island top.
As strong as the 3 day rally has been, it is still within a 6 month trading range. Trading ranges repeatedly disappoint bulls and bears. A bear trend day would disappoint the bulls. Consequently, there is an increased chance of a bear trend day today.
Since the 3 day bull trend is strong, it will likely have to go sideways before it can go down. That makes a trading range day more likely than a bear trend day.
The bulls want a 4th consecutive bull trend day. However, the rally is now near the top of the 6 month range. It will likely stall today or tomorrow. This means that the 3 day bull trend will probably enter a trading range day today.
All trading ranges eventually end. Most attempts fail. However, if the next few days are bull days and the rally breaks above the March high, this rally could continue to form many bull days and continue up to a new all-time high within a couple months.
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 pullback in bear rally
After 5 consecutive bull bars on the EURUSD daily Forex chart, today will likely be a bear bar. However, it is only the 2nd bear bar in 8 days. Furthermore, bear rallies usually reach the most recent sell climax high. Therefore, today is probably the start of a 3 – 5 day pullback in the bear rally.
The EURUSD daily Forex chart is pulling back after 5 consecutive bull trend day. The pullback will probably fall below 1.1700 over the next few days because that is the most recent major higher low on the 4 hour chart.
Whether or not it does, the bear rally will probably reach the June 14 high within a few weeks. That is because June 14 was a big sell climax late in a bear trend. Bear rallies usually reach the high of the most recent sell climax. This is especially true after an extreme sell climax at major support. In addition, there was then a reversal up from a double bottom.
The bear trend in May was exceptionally strong. It therefore can resume at any time. Breakout of trading ranges usually fall for a measured move. Consequently, the minimum goal for the bears is a 300 pip measured move down below the 2 month Low 2 bear flag. June 14 was the 1st high of the double top.
While yesterday might be the resumption of the bear trend, the bears will need 3 or more consecutive bear trend days before they will have a 50% chance of success. It is currently more likely that this selloff will last a few days and form a higher low. Then, the bear rally will continue up to the June 14 high.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart sold off 90 pips from yesterday’s high. It is strong enough to create a Big Up, Big Down pattern with last week’s rally. Therefore, a trading range is likely over the next several days. Traders will probe for a bottom to the range. That bottom will probably be around 1.1700. This is because there are higher lows around there on the 240 minute chart. In addition, it is around a 50% pullback. Finally, the 5 day rally is a small buy climax. When there is a pullback, the bottom of the buy climax is a magnet.
Since a trading range is likely for a few days, day traders expect a lot of small legs up and down. They therefore will be scalping for 10 – 20 pips. If there is a strong breakout up or down, they will try for a 30 – 50 pip swing trade. However, a big trend on the 5 minute chart is unlikely for at least a couple days.
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.
The March high is only 13 points above today’s high. Hence, the rally might have to get there before there is any selling.
Today was the 6th day in a bull micro channel on the daily chart. Therefore, there will probably be buyers below, even if the Emini gaps down tomorrow and forms a 1 day island top. Any pullback will probably last only 1 – 3 days.
Since the 60 minute chart has a parabolic wedge rally, the odds favor sideways to down prices for at least a couple of days. This should be begin tomorrow or Thursday. Less likely, the rally will continue up far above the March high before there is a pullback.
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.
