Emini breakout test of January’s high and last week’s gap
I will update again at the end of the day.
Pre-Open market analysis
Yesterday had several reversals and therefore was a trading range day. The Emini tested into the gap below last week’s low, but did not close the gap. Furthermore, it reversed up from just above the January high. That is the breakout point of the 2 week rally. It is important to note that sometimes a small breakout test like this can lead to a huge bull trend.
However, the reversal up was not especially strong. In addition, by going below last week’s low, the Emini triggered a minor weekly sell signal. Therefore, the Emini might fall to below the January high before the bull trend resumes.
Overnight Emini Globex trading
The past 2 days had rallies into the close, which is bullish. Yet, yesterday opened down. In addition, since the Emini is down 10 points in the Globex session, today probably will open down as well. This erases that bullishness of those strong closes and it increases the odds that last week’s gap will close this week.
The daily and weekly charts are overbought and at the resistance of the top of the 8 month trading range. While last week broke above the range, there has been no follow-through. Therefore, the breakout is not yet successful. This means that it could reverse down for several weeks before the bulls try again.
An obvious target is the bottom of the bull channel on the daily chart, which is around 2850. Less likely, the Emini could reverse into a bear swing that tests below the midpoint of the 8 month range.
The Emini has been sideways for 6 days. Traders are deciding between trend resumption up and trend reversal down. Either could be strong. Therefore, while the days have been mostly in trading ranges on the 5 minute chart, there is an increased chance of a big trend day up or down. With September and October’s notorious history, traders should be ready if a selloff begins because it could be surprisingly strong.
Yesterday’s setups
Here are several reasonable stop entry setups from yesterday. 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 parabolic wedge bull flag at support
The EURUSD daily Forex chart had big doji bar yesterday. It was the 3rd small leg down in a parabolic wedge pullback to support. Today so far is a doji inside day.
The 3 week rally on the weekly chart probably ended the bear trend on the daily chart. Now, the chart is now back in its 4 month trading range. While it might continue sideways for several more weeks, the odds favor a test of the 1.1850 top of the range.
At some point over the next few months, the bulls will probably get a breakout. Then next target would be a 50% retracement of the 2018 rally. That would be a test of the 1.20 Big Round Number.
Overnight EURUSD Forex trading
The daily chart is at support after a 3 week rally. Therefore, day traders will look to buy reversals up and bull breakouts on the 5 minute chart for scalps and swing trades. Since the daily chart is now in a bull trend, day trading bears will mostly look to scalp reversals down for 10 – 30 pips.
Because yesterday was a big day and today opened in its middle, traders will look to sell rallies near yesterday’s high and buy selloffs near yesterday’s low. Today will probably be either an inside day, or only break slightly beyond yesterday’s range.
The 6 day wedge bear channel is a big move down after a bigger move up. That creates confusion and typically leads to a trading range. Therefore, the EURUSD might spend a few days between 1.15 and 1.1650. However, the odds favor higher prices over the next couple of months. Day traders will be ready to swing trade strong rallies.
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 sold off in a sell climax on the open and reversed up from 1 tick above the bottom of last week’s gap. Also, it reversed up from below the January high. However, the reversal up was not strong. Therefore, the Emini is still deciding whether the breakout above the January high will succeed or fail. Traders need more information.
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.
