Emini 9 week bull bar streak converting into small pullback
I will update again at the end of the day.
Pre-Open market analysis
On the weekly chart, the bears finally got their 1st bear bar after a streak of 9 consecutive bull bars. In the 20 year history of the Emini, there have been many streaks of 8 or more bull bars. Once there was a bear bar, the Emini then went sideways to down for a few weeks. That is likely here, even if the Emini goes a little above last week’s high.
Nine consecutive bull bars is a sign of strong bulls. Consequently, the odds are against a big selloff. Many bulls will take some profits and then wait to see how far down the selloff goes. Once it stalls, they will buy again. The selloff will probably only last a few weeks and not be deep.
Less likely, there will be an Endless Pullback that lasts 2 – 3 months. That is a bull flag that just keeps adding bars in a gentle bear channel. It is a common type of pullback after a Small Pullback Bull Trend like the bulls have had for 2 months.
Since the Emini will likely begin to go sideways for a few weeks, there will be more trading range trading on the 5 minute chart. Furthermore, if the Emini rallies or sells off for a day or two, traders will look for a reversal.
Overnight Emini Globex trading
The Emini is up 10 points in the Globex session. It will probably gap up on the weekly chart, like it did last week. However, last week’s gap up closed. Since small gaps typically close quickly, today’s gap up will probably close today or tomorrow.
The bulls are trying to break strongly above the October high. While they will probably succeed at some point this year, there will probably be a pullback 1st. Since that target is only about 10 points higher, the pullback will likely begin within a week.
Ten consecutive weeks is extremely unusual. Many bulls will probably begin to take profits this week or next. That will result in a 2 – 3 week pullback of at least 50 – 100 points.
However, until the bears can get 2 – 3 consecutive big bear bars on the 5 minute chart and 2 – 3 consecutive bear days closing on their lows on the daily chart, traders will correctly continue to bet on higher prices.
While the strong bull trend is continuing, almost every day has had at least one swing up and one swing down. In addition, there have not been many big trend days up or down on the 5 minute chart. Day traders will continue to bet that this price action will continue.
Friday’s setups
Here are several reasonable stop entry setups from Friday. I show each buy entry with a green rectangle and each sell entry with a red rectangle. I rarely 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 currently in the market, these entries would be logical times for him to enter.
EURUSD Forex market trading strategies
I wrote last week that the EURUSD daily Forex chart would pull back early this week. This is because the 3 week rally was in a wedge, which is a buy climax. Buy climaxes lead to exhausted bulls, who then take profits.
Furthermore, I said that the 3 week rally was strong enough so that the 1st leg down would likely stall about half way down. There is support at the February 19th and 22nd lows. The overnight selloff is near that support. In addition, the chart has been in a tight trading range for 9 days. That February 19th low at around 1.13 is the bottom of the range. Therefore, the daily chart will probably work sideways to down a little more this week.
I have repeatedly made the point that the chart has had many strong legs up and down, but that each one was more likely to reverse than to begin a trend. There is no sign that the 4 month range is about to break into a trend. Consequently, traders will continue to look for reversals every 2 – 3 weeks.
Because this 4 month range is unusually long, there will probably be a breakout within a month. Traders are waiting for information on Brexit, which has been very slow to resolve.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart sold off 45 pips overnight. It therefore broke below the bull trend line of the past 3 weeks. However, the overnight selloff was not strong. It is therefore unlikely to be the start of a move down to the February low. Instead, the bulls will probably buy again between 1.1250 and 1.13.
Since the daily chart has been in a 100 pip range for 9 days, there is no sense of urgency. Traders think the price is just about right. When that is the case, they buy low and buy more lower, they sell high and sell more higher, and they take small profits. They do not believe that any leg up or down will go far. Day traders have been looking for reversals and brief breakouts. They have been scalping for 10 – 20 pips.
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 show each buy entry with a green rectangle and each sell entry with a red rectangle. I rarely 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 currently in the market, these entries would be logical times for him to enter.
End of day summary
The Emini went above Friday’s high, which was last week’s high. It sold off to below Friday’s low and below last week’s low. Today is therefore an outside down day and this week is an outside down week. The strong midday rally creates confusion. It therefore increases the chance that tomorrow will be a sideways day. It might be an inside day, which often follows an outside day.
Because the selloff was big, there will probably be at least a small 2nd leg down within a week or so. Less likely, the Emini will get back above last week’s high later this week. That would convert the outside down week into an outside up week.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
Trading Room
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Charts use Pacific Standard Time
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.
