Emini doji bar in tight trading range to begin October
I will update again at the end of the day.
Pre-Open market analysis
By going above last week’s high, yesterday triggered a buy signal on the weekly chart. The bulls need to begin to form bull bars closing near their highs on the daily chart. Without that, the September high will probably be the high for the next several weeks.
Since last week was a bear bar, it is a low probability buy signal bar. Therefore, there might be more sellers than buyers above its high.
Furthermore, last week’s range was small. Consequently, this week might eventually trade below last week’s low. That would create an outside down bar on the weekly chart. Since the weekly chart is overbought, that could be the start of a pullback to the 20 week EMA.
Although yesterday gapped up, it fell below Friday’s high. The gap therefore became an exhaustion gap on the 60 minute chart. But, most exhaustion gaps are minor reversal setups, especially on smaller time frames. The bears will need a series of bear bars on the daily chart to convince traders that a move down to the 20 week EMA is underway.
The majority of the days over the past several weeks have had mostly trading range trading. In addition, most closed near their opens. That increases the odds of more trading range trading today. Trend traders need a series of trend bars up or down on the daily chart.
Overnight Emini Globex trading
The Emini is down 4 points in the Globex session. Even though yesterday was a bear channel on the 5 minute chart, a bear channel is a bull flag. This means that the odds favor a breakout above the channel today. Channels usually transition into trading ranges, and that is what is likely today.
While yesterday was a bear day, it held above Friday’s bull trend reversal low. Therefore, it is still more likely a pullback from the 2 day rally than the start of a bear trend.
The Emini has been sideways for 2 weeks. Day traders have been looking for reversals. The tails on the bars on the daily chart indicate reversals. That will probably continue today. This is especially true since yesterday was a doji bar on the daily chart, which is sign of a neutral market.
Yesterday’s setups
Here are several reasonable stop entry setups from yesterday. 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 minor bear trend reversal but head and shoulders bottom
After 5 consecutive bear days, the bulls will need a micro double bottom. They want a double bottom with the September 10 higher low. This would also be the right shoulder of a head and shoulders bottom.
As strong as the 5 day selloff has been on the EURUSD daily Forex chart, it is probably just a pullback to the middle of the 6 month trading range. It is about a 50% pullback, a test below the September 10 higher low, and a test of the 1.15 Big Round Number. If the bulls can stop the selling and create a small trading range over the next week or two, they will create a credible right shoulder of a Head and Shoulders Bottom.
Even though the odds favor an eventual successful breakout above the 6 month range, trading ranges resist breaking out. Consequently, the trading range could continue for several more months. Traders who bet on reversals after every 5 – 10 day move have been making money. Until there is a clear, strong breakout out of the range, traders will buy low, sell high, and take profits within a few days.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart sold off 70 pips overnight, but reversed up 40 pips after falling below the September 10 low. Since 1.15 is a Big Round Number, the bears will probably get a test below it within a week.
The daily chart is in the buy zone since it is at the support on the daily chart. Therefore, despite 5 bear days, the bulls will buy reversals up. The 1st reversals up will be minor. This means that the bulls will mostly scalp for 10 – 20 pips today.
But, the daily chart is oversold and now at support. Consequently, the bears will sell rallies, not at new lows. In addition, they will take profits after 10 – 30 pip selloffs.
Because the daily chart is at support, the odds are that it will begin to enter a trading range for a week or more. This will limit the size of the swings on the 5 minute chart.
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.
The Emini reversed up from above yesterday’s low. However, it stayed below yesterday’s high. After reversing down, it stayed above yesterday’s low. Today was therefore an inside bar on the daily chart. It was also a doji day, which is a weak buy and sell signal bar for tomorrow. The 3 week trading range shows no sign of breaking out yet. The daily chart is still deciding on a new high or a test down to the 20 week EMA.
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.
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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.
