Emini all time high 2400 breakout despite Trump firing Comey
The Emini sold off in a series of strong bear bars on the open. It triggered the sell signal on the daily chart, and is Always In Short. The odds are that today will be a bear trend day. It probably will enter a trading range soon, but bears will sell the 1st rally.
It is always possible that this selloff could reverse up, but the bulls would need a parabolic wedge bottom or strong reversal up. The odds are small at the moment.
Pre-Open market analysis
Yesterday reversed up from a test of Tuesday’s low and formed an inside day. The bulls therefore now have an ioi bull flag on the daily chart. The momentum up has been good prior to the 3 week trading range. Consequently, the odds still favor higher prices within the next couple of weeks.
Since the weekly chart has an extreme buy climax, the odds are that any rally will reverse down within a few weeks. Furthermore, there is a 70% chance that the Emini will reverse down to below the weekly moving average. Finally, that reversal will probably begin within a few weeks.
The bulls tested 2400 to the tick on Tuesday. They touched the price many time, but could not break above it. A big round number above is always important resistance. Also, a prior high, like the March 1 high, is also major resistance. Yet, a test of resistance often goes above the resistance before reversing down. Therefore, even if the rally reaches 2420 before reversing, traders would still see the reversal as a failure at resistance.
Overnight Emini Globex trading
The Emini is down 4 points in the Globex market. Since yesterday was an ioi pattern on the daily chart, it is both a buy signal bar and a sell signal bar. Because it had a bull body and the 3 week rally was strong, it is a weak sell signal bar. Hence, the bull will probably buy below its low.
Yet, the weekly sell climax will likely lead to a 100 point selloff at some point within 3 weeks. Therefore any reversal down can be the start. This includes one that begins with a low probability sell signal bar. While the odds are small, traders need to be ready for a series of big bear trend days beginning at any time over the next 3 weeks.
Since most of the past 10 days have been trading range days, the odds favor another trading range day again today. Because the chart is at important resistance, the bulls can get a strong breakout above resistance. As a result, traders should be ready for a possible big bull trend day within the next few days. However, because the odds favor a 100 point pullback beginning within the next few weeks, a strong breakout can reverse down later in the day. Furthermore, a bear breakout and big bear trend can begin at any time.
EURUSD Forex market trading strategies
The bears reversed the breakout above the 6 month bull channel and the 6 month trading range. Yet, the reversal only ended the 5 week rally. It did not convert the it into a bear trend. Until there is a stronger move down, the chart is now neutral. The bulls want a resumption up from this test of support. The bears want the pullback to fall far below support. Hence, they want a bear swing.
Since the pullback has totally reversed the breakout, the daily chart is back to neutral. There is therefore a 50% chance that the bulls will get another leg up and a 50% chance that the bears have begun a swing down. Four bear bars after a breakout is disappointing for the bulls. They therefore will usually want at least a micro double bottom before they will be willing to hold onto positions for a swing up. Hence, they will not trust the 1st rally from support. They instead will want support tested a 2nd time, and for it to hold twice.
The bears are confident after getting 4 bars down from the breakout. They therefore will sell the 1st rally. Since both bulls and bears will sell the 1st 100 pip rally, the EURUSD will probably form a lower high. The bears will then want a reversal down. The bulls will want a double bottom at support.
Because traders will sell the 1st rally and the bulls will buy a 2nd test of support, the EURUSD daily chart will probably be sideways for the next week. Yet, the bears already have done enough to create a top. They have a reversal down from the top of the 6 month bull channel. If the 4 day selloff simply continues down for several days, traders will conclude that the bulls were unable to hold support. They will then expect a test down to the April 10 higher low.
Overnight EURUSD Forex trading
The 4 day selloff on the 240 minute chart has been in a tight bear channel. Consequently, the 1st reversal up will probably be minor. Hence, the bulls will scalp and take profits after a 50%, 50 – 100 pip rally. Additionally, the bears will sell, expecting a test back down.
Since the EURUSD is now at support, the odds are that it will bounce over the next couple of days. Reasonable targets are a 50% pullback and the April 26 high. That means a 50 – 100 pip rally.
While the bears can create an endless pullback from last week’s high and a bear swing, the odds are more likely that the EURUSD will bounce at support. This is because there are several types of support around the same price. That support includes a 50% pullback of the 5 week, rally, the weekly EMA, the April 24 gap, and the top of the 6 month trading range.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Today was a bull reversal day up from the daily moving average. It is therefore a buy signal bar tomorrow. The odds favor a new all-time high above 2400 within a week. But, because of the unusual buy climax on the weekly chart, the new high will probably fail within a few weeks.
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.