Emini breakout above December sell climax high
I will update again at the end of the day.
Pre-Open market analysis
The Emini yesterday broke above several important resistance levels yesterday. The first was the December 12 high. That was the top of the December stock market crash. It also broke above the 2017 close, which was the most important magnet in 2018. The Emini oscillated around it all year. Finally, it broke above the 2,700 Big Round Number.
It pulled back in the middle of the day, but closed on the high. Traders are deciding if the rally will continue up to the November high around 2,800, or begin a 50% pullback. The pullback is more likely, but there is no credible top yet.
The Emini is in the sell zone on the daily chart. The bulls will begin to take profits and look to buy again low. In addition, the bears will begin to sell here and higher.
Today is Friday so weekly support and resistance are important. The most important magnets are the ones that I mentioned above.
The week will probably be a big bull bar on the weekly chart. We will find out if it will close on its high. If so, next week will probably trade at least a little higher.
Buy signal bar on monthly chart
January is a buy signal bar on the monthly chart and it closed near its high. The bulls will try to trigger the buy today by going above yesterday’s high.
However, because of the possible topping pattern on the 5 minute chart, there might be more sellers than buyers above the January high. In addition, whenever a signal triggers on a higher time frame, there is typically a pullback soon afterwards on the 5 minute chart. Consequently, traders should not necessarily expect a big bull trend on the 5 minute chart if the monthly buy signal triggers.
Also, the buying has been climactic on the 5 minute and daily charts. Finally, the daily chart is in the Sell Zone at the December 12 high. These factors make a 2 – 3 week pullback likely to begin within a couple weeks.
Overnight Emini Globex trading
The Emini is up 1 point in the Globex session. Yesterday ended with a parabolic wedge rally and a break above a 4 hour trading range. This is a potential higher high major trend reversal sell setup.
But, the bears need a reversal down today. Because yesterday’s rally was exceptionally strong, if there is a reversal down today, it will probably be minor. That means a trading range is more likely than a bear trend.
Since the buying has been climactic on the daily and 5 minute charts, and yesterday was mostly sideways, today will probably not be a strong bull trend day. The bulls have already accomplished a lot. They will try to keep this week’s close above the December high and the close of 2017. Both will be magnets today, especially in the final hour.
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 has increasing buying pressure in 4 month trading range
The EURUSD daily Forex chart rallied for 5 days to back above the top of the 4 month trading range. Yesterday was a bear reversal day. However, so far, there were more buyers than sellers below its low.
I have been saying this week that the bulls would buy the 1st reversal down. That is what has been taking place overnight.
In addition, I wrote that the bears would need a micro double top if they were to get a leg down. The overnight rally is creating a potential micro double top. If the EURUSD reverses down today or tomorrow, there would be a micro double top. This would increase the chance of a test down to 1.1350 – 1.14.
But, the buying pressure is increasing. This rally is the 2nd break above the 4 month trading range in 4 weeks. Furthermore, as strong as the January selloff was, it reversed back up from a higher low. Also, that followed higher lows in November and December.
This is increasing buying pressure, which often develops before a bull breakout. Consequently, the odds of a bull breakout are increasing.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart reversed up overnight from below yesterday’s low. Since the daily chart is at the top of the 4 month trading range, there will probably be a pullback starting today or Monday. A reversal down would create a micro double top. This would make a pullback to around 1.1350 likely within 2 weeks.
The 5 minute chart began to reverse down a few minutes ago, but reversed back up to a new high. If today closes above its open, it will be a buy signal bar for Monday. The buy signal will be stronger if today closes on its high.
However, if it has a big tail on top, it would be a weak buy signal bar. There would probably be sellers above on Monday, which could create a micro double top with yesterday’s high.
Today could be either a buy or sell signal bar on the daily chart
Today’s close is important. Therefore, the bulls will buy 20 pip selloffs and try to get the day to close near its high. This would create a good buy signal bar on the daily chart. That would increase the chance of a successful break above the 4 month range within a couple weeks.
The bears will sell rallies. They want today to close near its low. Today would then be a micro double top with yesterday, and a sell signal bar for Monday.
Because the overnight range has been small, today will probably remain in a trading range. Traders will mostly scalp.
However, 4 months in a trading range is unusual. Therefore there will probably be a breakout in February. In addition, the increasing buying pressure makes a bull breakout slightly more likely.
Despite all of the small trading range days, traders will quickly switch to swing trading once the breakout begins.
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
After a brief rally on the open, today became a trading range day. It reversed up from a new low and a test of 2,700 and closed near the open. Since it is a doji day, it is a weak sell signal bar for Monday.
However, the Emini is in the Sell Zone above the December 12 crash high. In addition, the rally is climactic. Therefore, a 2 – 3 week pullback will probably begin within the next couple weeks.
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.
