Emini bad sell signal bar on weekly chart
Pre-Open market analysis
The Emini yesterday broke above Monday’s bear channel on the open, but sold off in a bear trend from the open. After closing a gap on the daily chart and reversing up from below last year’s close, it sold off late. Because of the multiple reversals over the past 2 days, today will also likely have a lot of trading range price action.
By falling below last week’s low, the Emini triggered a weekly sell signal. But, last week was a bull bar on the weekly chart and therefore a bad sell signal bar. Consequently, there will probably be more buyers than sellers below last week’s low.
Since last week is a weekly sell signal bar, this week’s close will be important. The bears will want the week to close below last week’s 2717.00 low. The bulls always want the opposite and will buy into the end of the week.
Even though yesterday was a bear trend day, there is support around the 2700 Big Round Number and the 2689.75 close of last year. In addition, there is a magnet above at the 2717.00 low of last week.
Overnight Emini Globex trading
The Emini is up 1 point in the Globex session after trading sideways overnight. Yesterday’s late strong rally will make the bulls buy a test of yesterday’s low. They will try to create a major trend reversal up and a bull trend day.
The bears hope that the late selloff was from a double top bear flag with the 9:25 a.m. PST high. They then want a break below yesterday’s low, which is the neck line. Finally, they want a 30 point measured move down.
But, the daily chart is at support in the middle of a 2 month trading range. In a trading range, the bulls and bears typically are disappointed by a lack of follow-through. Consequently, the odds are against another big bear trend day today. More likely, there will be buyers around yesterday’s low and today will either be a trading range day or a weak bull trend day.
Since today will open around yesterday’s low, day traders will look for a swing up that begins within the 1st 90 minutes. However, if the day sells off strongly, they will not fight the bears trend. They will sell.
EURUSD Forex weak bear flag so more sideways price action
The EURUSD daily Forex chart had a big bear bar on Monday that closed far below the August/October double bottom. But, Tuesday reversed up strongly. In addition, there is a wedge bottom on both the daily and weekly charts.
While the bulls want a reversal up, the 2 month bear channel on the weekly chart is tight. In addition, the 3 day selloff was strong. Consequently, the bulls will need to go sideways for at least a few weeks before they can create a major reversal setup on the daily chart.
Furthermore, the 3 big bear days will require a micro double bottom before they can get even a minor reversal up. Therefore, the upside over the next couple of weeks is probably just 200 pips in what will probably be mostly a trading range.
The 3 day rally is a bear flag. But, yesterday was a bull doji bar. So far, today is a doji bar as well. That represents a small tight trading range, which is a limit order market. As a result, if today remains a doji bar, there probably will be more buyers than sellers below its low. This means that the daily chart will probably be sideways for at least a couple more days.
The bulls want the week to close above the 1.1323 open of the week. They would then have a bull reversal bar on the weekly chart. But, since the 8 week selloff has only had one small bull bar, a reversal up next week would probably stall after 1 – 2 weeks.
In any case, the week’s open will be an important price for today and tomorrow. Therefore, the next 2 days will probably be mostly sideways around the week’s open.
Overnight EURUSD Forex trading
The EURUSD 5 minute chart rallied above yesterday’s high and the open of the week over night. It sold off 80 pips and then reversed up 50 pips. This is trading range price action around the key price of the 1.1323 open of the week. Traders will probably buy reversals up from 30 – 50 pips below and sell reversals down from 30 – 50 pips above until tomorrow’s close. This will create a scalper’s market.
Less likely, there will be a strong trend up or down and the week will close near its high or low. Unless there is a series of strong trend bars, day traders will be scalping.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
The Emini had a reversal up from below yesterday’s low, as I said was likely. The bulls later got a higher low major trend reversal and a test of the 60 minute EMA.
Finally, the rally tested back above last week’s low. That low will be important tomorrow. This week triggered a sell signal by trading below last week’s low. But, last week was a bull bar and therefore a bad sell signal bar. The bulls will try to get this week to close above last week’s low.
Today is a buy signal bar for tomorrow. Because of the higher low major trend reversal and head and shoulders bottom, the bulls want a strong rally tomorrow. If they get it, the rally could be the start of a yearend rally. Without it, the bulls will probably try for a micro double bottom next week.
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.
Hi Al… What types of parameters do you think about when deciding whether to buy above the high of the bar (as in your Always-In examples) or buy-the-close? And in both cases, is your stop the same?
Thanks – Neil
In general, when there is a Buy The Close market, it does not matter whether one buys at the market, with a limit order at the close, or on a stop above the high. I tend to enter with a stop above the high unless the rally is very fast. Then, I usually just buy the market either at the close or while the strong bar is forming.