Emini 9th consecutive weekly bull bar so buy climax
I will update again at the end of the day.
Pre-Open market analysis
The Emini yesterday traded above last week’s high and it closed above its open. This week therefore currently is the 9th consecutive bull trend bar on the weekly chart. There has only been one instance of more than 9 consecutive bull bars in the 20 year history of the Emini. Consequently, the odds are that either this week or next week will have a bear body on the weekly chart. Traders will therefore look for a reversal down this week.
The rally has been very strong. Furthermore, the triple top on the daily chart is an obvious magnet. The Emini has been trying to break above and hold above 2800 for more than a year.
Will the bulls finally succeed? Yes, probably at some point this year. But, this buying has been extreme. That makes at least a 2 – 3 week pullback likely before a strong break above 2800. However, until there is a top, the bulls will continue to buy and the odds favor at least slightly higher prices.
Overnight Emini Globex trading
The Emini is down 2 points in the Globex session. With the proximity to the strong magnet of the triple top above 2,800, the odds continue to favor higher prices. There is a small chance of an explosive move above that resistance.
The bears need to begin to create bear days. They especially need big bear days to begin a 2 – 3 week pullback. Yesterday’s late selloff might be the start of a swing down. However, the bears need strong bear trend days before traders will believe that a pullback is underway. Until they get that, the odds still favor sideways to up trading.
Most of the recent days had swings up and down. A lot of time has been within trading ranges. That will probably continue today. But, with the Emini just below major resistance, there is an increased chance of a big trend day up or down within the next 2 weeks.
EURUSD Forex market trading strategies
The EURUSD daily Forex chart rallied for 4 days from a micro wedge bottom. Because the wedge is at the bottom of a 4 month trading range, this could be the start of a bull leg that could last several weeks.
But, the February selloff had an unusually strong series of consecutive big bear bars. When a selloff is that strong, the bulls typically need a small double bottom before they can begin a swing up. Consequently, the odds favor a test down to around 1.1250 within 2 weeks.
The bulls expected 2 small legs up from their micro wedge. Once yesterday went above Monday’s high, it met the minimum goal. While the bulls hope this rally will continue, it instead is probably going to be a bear flag.
Bear flag, but bottom of trading range
If the bears today can create a bear bar closing near its low, it will be a sell signal bar for the bear flag. However, because trading ranges resist breaking out, even if the bear flag triggers and there is a selloff below 1.1250, the odds are that the bulls will get a reversal up.
A reversal up from around last week’s low would create a double bottom. The bulls would then look for a test of the middle of the range, above 1.14, as their minimum goal.
I said that the bears see this 4 day rally as forming a bear flag. They still need a strong break below the November low before traders will conclude that the trading range has converted into a bear trend.
Because 4 months is a long time for a trading range, there will probably be a breakout within a couple months. However, until there is a breakout, there is no breakout. Despite the strong selloff, the odds are only slightly better for the bears. Another week or two of higher prices will return the probability to 50% for the bulls and bears.
Overnight EURUSD Forex trading
The EURUSD 5 minute chart has been in a 30 pip range overnight. This is because the bulls achieved their goal of 2 legs up to the 20 day EMA. The bulls are beginning to take profits and the bears are starting to sell again.
Since today is a sell signal bar at the EMA on the daily chart, its close is important. The bears want the day to close on its low. That would form a higher probability sell signal bar on the daily chart. They therefore will sell rallies.
However, the bulls want at least a small bull body on the daily chart. They therefore will buy dips below the open.
Neither the bulls nor the bears need a big day today. Today is a decision day and the fight will be over the close of the day. Consequently, the overnight trading range will probably continue all day, with both sides fighting over where the day will close.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
Today was filled with reversals. The Emini broke above the range of the 1st 18 bars, then below, and then above again. It remained a trading range day. Because is closed above the middle of the range, it is a low probability sell signal bar for tomorrow.
The bulls are still trying to get above 2800 and the triple top just a little higher. At some point, if they continue to fail, they will sell out of their longs. That will probably result in at least a 2 – 3 week pullback. The odds favor a reversal down starting within 2 weeks.
However, that increases the chances of a big bull breakout as well. The bears who have been shorting could get squeezed out on a break above the triple top.
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.