Intraday market update: Wednesday April 3, 2019
I will update again at the end of the day.
Pre-Open market analysis
I mentioned before the open yesterday that yesterday would probably have at least 2 hours of trading range trading. That was because Monday’s rally was weak and therefore likely to transition into trading range price action. The entire day was a trading range day.
Yesterday closed near its low. There are now 3 legs up on the daily chart. That is a wedge bull channel. Yesterday is now a sell signal bar for today. However, it was small, the momentum up has been good, and the all-time high is a magnet above.
Yesterday is also a pause in a bull trend. It is therefore also a High 1 bull flag coming into today. Its bear body reduces the chance of a sustained rally today and tomorrow.
Since the 3 month bull channel is tight, the Emini might have to go sideways for a few days before there is a reversal down. But, as I have said several times over the past few weeks, the odds are that the Emini will test the March low and begin to trade sideways to down within a couple weeks.
This is still more likely than the rally continuing straight up to a new all-time high. But, the closer the rally gets to that high, the more likely the bulls will get a new high.
Bull micro channel on 60 minute chart
Coming into yesterday, the 60 minute chart had a 12 bar bull micro channel. This is similar to what I have been saying about the weekly chart. When there is a micro channel with many bars like this, the bulls typically buy the 1st reversal down. And they did yesterday.
Next, the odds favor a breakout above the top of the micro channel and a brief resumption of the bull trend. That was Monday’s high, and yesterday broke a little above it. Today might rally more.
Finally, the micro channel is a sign that the bulls might be exhausted. As a result, there is usually a deeper pullback after the rally gets above the top of the micro channel for a few days. Therefore, there will probably be sellers not too far above Monday’s high.
Overnight Emini Globex trading
The Emini is up 18 points on the Globex chart. Today will therefore gap above yesterday’s high. When there is a big gap up, there is an increased chance of a trend day. A bull trend is slightly more likely.
However, a big gap up means that the 5 minute chart will be far above its 20 bar EMA. Traders do not like to pay too much above the average price. Consequently, the first 60 – 90 minutes usually enters a trading range until the EMA gets near the market.
At that point, the bulls will look to buy a wedge bull flag or a double bottom near the EMA.
A trading range always has both a bull and bear setup. The bears will look to sell a double top or a wedge rally.
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 market trading strategies
The EURUSD daily Forex chart turned up overnight from above the March 7 low. This is a double bottom. There is a Spike and Channel bear trend over the past 6 days on the 240 minute chart. Traders expect a test of the start of the channel, which is the March 25 high, just above 1.13.
The daily chart has had many 2 – 3 week long legs up and down over the past 4 months. This reversal is probably the start of a couple weeks of sideways to up trading.
Brexit is an important catalyst. A surprise announcement can come anytime. It could lead to a huge move up or down. Until then, traders will continue to look for reversals every 2 – 3 weeks.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart rallied 70 pips from yesterday’s low. The rally has been in a tight bull channel. This is a sign of eager buying. When that is the case, there is usually at least a small 2nd leg up after the 1st reversal down. Consequently, day traders will look to buy 10 – 30 pip pullbacks today, and a 50% pullback over the next few days.
They will wait to sell for scalps. As long as the bull channel on the 5 minute chart remains tight, it will be difficult for the bears to make money. However, today will likely begin to enter a trading range. Once it does, the bear day traders will scalp reversals down from above prior intraday highs.
The bears hope that this rally will form a double top with Monday’s high. That would create a small bear flag on the daily chart. They then want the 2 week bear trend to resume and break strongly below the March 7 low.
Two weeks of sideways to up is more likely because every breakout attempt for 4 months reversed. This one will therefore probably also reverse for at least a couple weeks.
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
The strong early selloff made a bull trend day unlikely. The rally to a new high made a big bear trend unlikely. This resulted in a trading range day. The midday selloff turned the day into a bear trend reversal day. Profit taking by the bears created a reversal up into the close. The day closed near the open and was a bear doji day.
Today is now a sell signal bar for tomorrow. But, a bear doji is a weak sell signal bar.
A gap down tomorrow would create a 3 day island top. However, island tops are minor reversals.
The odds still favor a 2 month selloff before a new all-time high. But, if the bulls begin to get a series of bull bars closing near their highs, the probability which shift in favor of a new all-time high.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
Trading Room
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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.
Al do you place any significance on the EURUSD being almost right on the .618 retracement from the Jan 2017 low to the Feb 2018 high? Thanks.
No. Nobody makes money from Fibs. I don’t have time to explain it, but I have many times in the past. There is no logical basis for Fibs and therefore most traders ignore them. A sea shell has nothing to do with how traders make decisions, even though it is natural for people to want to believe in magic.
50% and 100% are clearly important, but are not Fibs. Some computers pay attention, and sometimes they coincide with other more important support or resistance. That makes them appear to be useful, but they are a useless false god. Everyone wants something to protect them. Fibs will not do it.
Thanks.