The Emini gapped below yesterday’s tight bull channel. Yet, the odds are that the early selling will lead to a trading range after yesterday’s channel. Furthermore, the Emini has been in a tight range for the past 7 days. In addition, that range is within a 2 week trading range. Hence the odds are that this will be a trading range open rather than a opening reversal up from the support at the bottom of yesterday’s bull channel.
While the Emini is Always In Short, the bulls have had several profitable scalps. Furthermore, the was only one strong bear bar in the 1st 6 bars. In addition, only 1 of the 1st 5 bear bars closed on its low. Hence, there is enough buying pressure so that this selloff will probably begin to go sideways for an hour or two. It might have to test the 48 low or yesterday’s low before there is a swing up.
Pre-Open Market Analysis
The Emini continues to decide whether the Dow will break above 20,000 without first pulling back below the August high. Because the daily and weekly charts have strong momentum up, the odds still favor the bulls. Yet, at some point, they give up. If they do, they will create a bear breakout below the month long trading range. Furthermore, once traders see the bear breakout, both bulls and bears will sell. In addition, they will not begin to buy again until around 2180, which is the August high.
While it is possible for the bulls to get a strong breakout above the high and then rally to 2400 without 1st pulling act, the odds at this point favor about a 5% pullback before going above 2400.
Yesterday reversed up strongly from a double bottom. Yet, it was so far only a test of the trading range high. In addition it is down 5 points in the Globex session. As long as both bulls and bears are disappointed by breakout attempts up and down, the odds favor most days being trading range days. Yet, most days have had at least one good swing trade. Everyone knows that a breakout up or down will come soon.
EURUSD Forex Market Trading Strategies
While the 60 minute chart has had a spike and channel rally over the past 2 days, the bulls have still failed to break above the trading range of the past month. If the EURUSD chart at tomorrow’s close is around the current level, the weekly chart will have another bull bar. Because that would be the 4th consecutive bull bar and a reversal up from the low of the yearlong trading range, it would increase the odds that the EURUSD will continue higher over the next few weeks.
At the moment, the odds are about 50% that the rally will test the December 8 high around 1.0870. Yet, 4 consecutive bull bars on the weekly chart will begin to flip the trend to Always In Long. If next week is a bull bar, especially a big bull bar, traders will conclude that the rally will test that December 8 lower high.
Because the 2 day was a Spike and Channel pattern, the odds are that it will evolve into a trading range today. The 40 pip selloff of the past 2 hours could be the start of that trading range. Since many of the recent days had legs of 40 or more pips intraday, there has been many good trades each day.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Traveling. No summary or chart today. Back to office and normal reports next Wednesday 18th.
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.