Emini in Breakout Mode at 2800 and March major lower high
I will update again at the end of the day.
Pre-Open market analysis
The Emini has rallied up to just below the March 13 major lower high of 2811.00. However, until there is a breakout, there is no breakout. The bears are selling up here. They want a double top and a reversal down to the middle or bottom of the 6 month trading range.
If the bulls fail to break strongly above 2811.00 within the next 2 weeks, the bears will being a month-long leg down in the 6 month trading range. Last Wednesday’s selloff might be the Final Bull Flag in the July rally on the 60 minute chart.
Day traders will begin to look for either a strong break above 2811.00 or a strong reversal down. Since the past 4 days have been sideways, the odds are that today will be mostly sideways again. But, since the daily chart is at unusually important resistance, a breakout up or down within the next couple of weeks will probably lead to a trend of about 100 points over the following month.
Neither side is strong enough yet to take control. Therefore, day traders will expect mostly sideways trading until there is a strong breakout up or down.
Overnight Emini Globex trading
Overnight, the Globex market rallied to within 2 points of the March 13 major lower high of 2811.00 on the daily chart, but again reversed down. The selloff lacked energy, just as the past 4 days on the have failed to have strong trends. The odds are that trading range trading will again be dominant today.
But, day traders know that a 100 point trend up or down will probably begin within a couple of weeks. They therefore should be ready to switch from trading range trading to trend trading at any moment.
Friday’s setups
Here are several reasonable stop entry setups from Friday. I sometimes 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 in a position at the moment, these entries would be logical times for him to enter.
EURUSD Forex double bottom bull flag and head and shoulders top bear flag
The EURUSD daily Forex chart has been in a trading range for 2 months. Every trading range has both a bull and a bear setup. Because this trading range followed an extreme sell climax, the odds are that there will be a test of the top of the range. That is the June 14 high.
Friday was a bull reversal bar on the EURUSD daily Forex chart. It was also a double bottom bull flag with the bear bar from 2 weeks ago. The bulls want a rally up from here.
Because the June 14 sell climax was extreme, its high is a strong magnet. This is especially true since the May selloff followed consecutive parabolic wedge sell climaxes on daily chart down to major support on the weekly chart. Therefore, the odds favor a rally to 1.1850 before a break to a new low.
Furthermore, the May 14 bear flag rallied to within 2 pips of the 1.20 Big Round Number. In addition, it was not tested. An untested important price usually gets tested. As a result, there is at least a 50% chance of the bear rally continuing up to 1.20 over the next 2 months.
If the bears begin to get consecutive big bear bars and a strong break below 1.15, then this 2 month bear flag will have ended. They will then try for a 300 pip measured move down to 1.12 over the next few months. However, the odds favor at least another 1 – 2 months of sideways to up trading before the probability will begin to shift again in favor of the bears.
Overnight EURUSD Forex trading
After Friday’s bull reversal bar on the daily chart, the EURUSD 5 minute Forex chart rallied 50 pips overnight. However, this rally is small and it lacked consecutive big bull trend bars on the 5 minute chart.
Day traders have been scalping, and today so far is a weak entry bar on the daily chart for the bulls. If today remains small, which is likely, the 2 week tight trading range will continue. Day traders will keep scalping longs and shorts until there is a series of big trend bars up or down on the 5 minute chart. This is true despite Friday being a good bull reversal bar at support on the daily chart.
Trading ranges have inertia. That means that there is a strong tendency to continue doing what they have been doing. The 200 pip tight trading range that began with the July 2 low will probably continue for at least a few more days. Therefore, the 100 point rally over the past 2 days will probably begin a 50 pip pullback today or tomorrow.
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 sometimes 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 in a position at the moment, these entries would be logical times for him to enter.
The Emini had its 5th consecutive mostly sideways day today. The bulls want a strong breakout above the March high. But, today is a sell signal bar on the daily chart and the bears want a strong reversal down. Day traders are waiting for a strong trend up or down. Until then, they are mostly scalping.
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.
Traders can see the end of the day bar-by-bar price action report by signing up for free at BrooksPriceAction.com. I talk about the detailed S&P Emini futures price action real-time throughout the day in the BrooksPriceAction.com trading room. We offer a 2 day free trial.
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.
