Emini daily and weekly doji bars after October sell climax
Pre-Open market analysis
The Emini formed a doji bar on the daily chart on Friday, and on the weekly chart as well. This is a sign that the bears were exhausted after the big selloff from 2 weeks ago. Traders are deciding whether the bear breakout was a trap or the start of a bear trend on the daily chart.
Since last year’s close is not far below and it is an important magnet, the odds are that the Emini will trade below that price within the next week weeks.
Will it get there today? While it is possible, the Emini has been in a trading range for 7 days. Since trading ranges resist breaking out, the odds favor more sideways days this week.
Overnight Emini Globex trading
The Emini reversed up 30 points in the Globex session and is currently 10 points above Friday’s close. Since the daily chart has been in a trading range for 7 days, the odds are that the trading range will continue today. However, every day has had big ranges and big swings. There is no sign that this is about to end.
Friday was an inside day with a fairly big range. Since today will open in the middle of Friday’s range and the daily chart has been sideways for 8 days, there is an increased chance of an inside day today, or at least a day that largely overlaps Friday. Consequently, day traders will look for reversals up from around Friday’s low and for reversals down from around its high.
While any day can be a trend day, today will probably be a trading range day, and possibly an inside day.
EURUSD Forex trading range might for wedge bottom
The EURUSD daily Forex chart has been selling off for the past month. But, the reversal up from the failed August bear breakout was strong. In addition, both the weekly and monthly charts are slightly bullish. As a result, the current selloff will probably reverse up from above the August 15 low.
If Friday’s reversal up is successful, the bulls will have a double bottom higher low major trend reversal. The bears only have a 40% chance of a break below the August 15 low before there is a break above the September high. However, they have a 50% chance of a breakout below the October 9 low. If they get that, but there is then a reversal up, the bulls will have a wedge higher low major trend reversal.
Today so far is a Low 1 bear flag. If today closes near its low, today will be a stronger sell signal bar. That would increase the chance of a selloff to 1.14 this week. Alternatively, if today has a big tail below, the daily chart will probably go sideways for at least a couple more days before deciding whether to test 1.14 or reverse up from the double bottom with the October 9 low.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart sold off 70 pips in a tight bear channel overnight. Over the past 3 hours, the bars have been getting bigger, overlapping more, and forming big tails. These are signs of more two-sided trading. They reduce the likelihood of much lower prices today. Therefore, the bears will switch to selling rallies and scalping.
In addition, they increase the probability that the overnight bear trend will transition into a trading range. Because the bear trend has been in a tight bear channel, the bulls will only scalp. They know the odds of a big reversal up are small without at least 2 – 3 hours of sideways trading first.
With both bulls and bears scalping, the chart should turn into a 30 – 50 pip tall trading range today.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
By trading below Friday’s low, the Emini triggered a minor sell signal on the daily chart. Since it closed below Friday’s low, there is an increased chance of at least slightly lower prices tomorrow. It is in the middle of an 8 day tight trading range and therefore in breakout mode.
The bulls might get one more leg up before the bears get a 2nd leg down from the selloff of 2 weeks ago. Because the selloff is probably a sell vacuum test of last year’s close and there is room to that target, the odds favor at least one more leg down within a few weeks.
The 8 day trading range and today’s trading range price action increase the chance of more trading range trading tomorrow.
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.
Today I bought above bar 22 (for a swing trade) as you show as a buy and reversed to sell (also a swing trade) on bar 24 as you also show as a sell. Should a trader exit the long at some point before bar 24 closes or is it best to wait for the bar to close?
Thank you in advance
In general, it is better to wait for a bar to close. But, when a reversal into an opposite swing looks reasonable, many traders will exit before the close. For example, many bears exited above bar 12 before bar 13 closed because they saw bulls making money with limit orders for several bars, and by going above 12, there was a 2nd reversal up from below yesterday’s low. That is a buy signal.