Emini buy climax in sell zone above December crash high
I will update again at the end of the day.
Pre-Open market analysis
Most of the trading over the past 2 days has been sideways. Furthermore, traders are deciding if there will be one more small leg up after the strong bull trend days on Wednesday and Thursday. This uncertainty makes a trading range day likely today, especially after a 2 day buy climax.
Friday was a doji day after the 2 day buy climax. Because the Emini is in the Sell Zone above the December 12 crash high, any reversal down can be the start of a 50% correction. Therefore, there is an increased chance of a bear trend day today. In addition, a 2 – 3 week reversal down will probably begin this month.
After 2 big bull bars, most bears want a micro double top on the daily chart. Therefore, there might be more buyers than sellers below Friday’s low, especially since Friday is a weak sell signal bar.
Overnight Emini Globex trading
The Emini is down 2 points in the Globex session. Since Friday is a sell signal bar on the daily chart in a buy climax, traders are expecting a transition into at least a small trading range.
A trading range has legs up and down. Therefore, the Emini will probably trade below Friday’s low, or tomorrow will likely trade below today’s low. That pullback would trigger a sell signal on the daily chart. But, the bull trend has been strong and Friday is a weak sell signal bar. Consequently, day traders will look for a reversal up from around Friday’s low. The Emini might go sideways for several days before it begins its 2 – 3 week pullback.
The daily chart is in a buy climax and in the sell zone above the December 12 high. As a result, day traders will be selling reversals down from around Friday’s high. Because of the buy climax, traders expect a 2 – 3 week pullback. That increases the chance of some bear trend days starting this week.
Friday’s setups
Here are several reasonable stop entry setups from Friday. 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 pulled back for 3 days from another breakout above the top of the 4 month trading range. This is a bull flag, but the location is bad. Most trading range breakout attempts fail. Consequently, there are probably more sellers than buyers above Friday’s high.
However, this trading range has lasted for 4 months. Every trading range over the past several years has broken out after 2 – 4 months. Therefore, this range will probably convert into a trend up or down this month.
The bulls have been getting higher lows for 2 month. In addition, on the monthly chart, the 2018 bear trend is a wedge bull flag and a 50% pullback. These factors make a bull breakout slightly more likely than a bear breakout.
But, it is important to realize that the probability is only slightly better. If the odds strongly favored the bulls, the trend would already be underway. Since it is not, the bulls and bears are still about equally strong.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has continued its 2 day tight trading range overnight. The range has been only 15 pips over the past 5 hours. That makes it difficult to make even a small scalp. However, day traders will look for scalps until there is a strong breakout up or down. There will probably be at least a small breakout today or tomorrow.
The past 3 days have been sideways and the range has been shrinking. Therefore, the 5 minute chart is in Breakout Mode, just as the daily chart’s 4 month trading range is a Breakout Mode pattern.
On the 5 minute chart, traders will pay attention to the highs and lows of the past 2 days. The bears will sell near the top and above, betting that the 4 month range will continue. The bulls will buy near the bottom and below, betting that any reversal down will form a higher low after the 2 week rally.
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 an early expanding triangle, the Emini formed a Small Pullback Bull Trend. It stalled after breaking slightly above Friday’s high. Since it rallies in the final minutes, there is an increased chance of a gap up tomorrow.
There is no top yet on the daily chart. But, the January parabolic wedge buy climax will probably end this week. A reasonable 1st target for a 2 – 3 week pullback is the trading range from 2 weeks ago. That is just above 2,600. If the selling continues, the next target is the February 2018 low and 2,500.
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.
Hey Al, at what point did it become clear that this was a Small Pullback Bull Trend and not a leg up in a trading range? I missed the whole thing anticipating a reversal down from yesterday’s high.
It is always easy to miss Small Pullback trends because they look like they will convert into a trading range. I always call them a Small Pullback trend early on, within the 1st 5 – 10 bars.
Usually, but the time there are 2 or more gaps or body gaps, the odds go up for the trend to last a long time. Once there is a big gap, like at 8:05 or 10:50 PST, it is clear. However, traders want to buy pullbacks.
Most of the stop entry buy signals yesterday were within a few ticks of the high of the day, forcing traders to buy at the top of a trend that did not look particularly strong. It is always okay to not take many trades and to wait for ones that are compatible with your personality.
No commentary on EURUSD? 🙁
Really enjoying the fx course Al, I’m making significant improvements. I was blind… but now I see.