Emini 9th bull week is buy vacuum test of 2800
I will update again at the end of the day.
Pre-Open market analysis
Last week was the 9th consecutive week with a bull bar on the weekly chart. There has been only one instance in the past 20 years with a longer streak. Every streak of 8 or more consecutive bull bars led to at least 3 weeks sideways to down. That therefore is likely again here.
Will this week be the 10th consecutive bull trend bar? Probably not. Consequently, traders will look for any rally this week to reverse down. That would begin the start of a 2 – 3 week pullback.
Why hasn’t the Emini turned down yet? Because it cannot escape the gravitational pull of 2800. The Emini has repeatedly tried to break strongly above it for over a year. It failed every time, including the rally to the September high.
There is a triple top just above last week’s high. It is also a magnet. The bulls hope to break strongly above the triple top and 2800 before there is a pullback. With the continued momentum up, they will likely get their breakout today or tomorrow. However, the extreme buy climax will probably limit the rally over the next 1 – 3 weeks.
Since the Emini is very close to the targets above, it might get vacuumed up there today. There is therefore an increased chance of a big bull day today or tomorrow. But, most of the days over the past week had predominantly trading range price action. Consequently, that is most likely for today. This is true even if the Emini breaks above 2800.
Overnight Emini Globex trading
The Emini is up 14 points in the Globex session. This week will therefore probably gap above last week’s high. In addition, it might gap above the 2800 Big Round Number and one or more of the tops in the 3 month triple top.
Because the Emini is testing major resistance, there is an increased chance of a big move up or down today. However, only 20% of days have strong trends from the open that last all day. The odds therefore favor at least one reversal in the 1st hour.
Most days enter a trading range in the first 60 – 90 minutes. The bears try to create a good sell signal bar for a wedge top or double top. In addition, the bulls try to create a reversal up from around the EMA. They want a good buy signal bar and a wedge bull flag or double bottom.
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
The EURUSD daily Forex chart has bounced for 2 weeks from the bottom of a 4 month trading range. The rally has stalled at the 20 day EMA. It is a bear flag. If there is a break above last week’s high, but then a reversal, the bear flag will be a wedge.
However, trading ranges resist breaking out. Consequently, the odds are against this bear flag leading to a 300 pip measured move down below 1.12. More likely, there will be buyers around the low from 2 weeks ago. They would create a double bottom with that low and then a 2 – 4 week rally to above the middle of the range. Alternatively, there could be a breakout above the bear flag without a test of the low.
The 4 month range is telling us that the bulls and bears feel the current price is fair. But, all prior trading ranges over the past 2 years ended within a couple months. Therefore, the tension has been building up for an unusually long time.
When that is the case, once there is a successful breakout, it will probably have more energy and endurance. It will therefore probably last for several months and move at least 300 pips.
Overnight EURUSD Forex trading
A tight trading range is a breakout mode pattern. But a breakout up or down will likely be brief. The odds favor a test of the low from 2 weeks ago. Consequently, a bull breakout will probably fail. Since a higher low is likely, a bear breakout would probably only last 2 – 3 days.
The past 3 days were doji bars in a tight trading range. Today is testing both the top and bottom of that range. Because the bars are small and the range is only 30 pips tall, day traders are scalping.
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 gapped up on the weekly chart. It also broke above the December stock market crash high and the 2800 Big Round Number. However, it then reversed down and tested 2800.
Today is a sell signal bar for tomorrow. But, the 2 month bull channel is tight. A tight bull channel typically does not reverse into a bear trend. It usually has to transition into a trading range 1st. As a result, the downside risk is not great over the next week.
Because the buy climax is extreme, there is probably not much left to this rally before there is a 2 – 3 week profit-taking pullback.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
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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.
