Emini forming weekly inside bar for Breakout Mode setup
I will update again at the end of the day.
Pre-Open market analysis
After Wednesday formed a big outside down day, yesterday formed a bull inside day. The ioi on the daily chart is a Breakout Mode pattern. Because yesterday had a bull body, it is a low probability sell signal bar. But, after 4 consecutive bear days, it is a low probability buy signal as well. Therefore, there are probably sellers above and buyers below. If today is a 2nd consecutive inside day, it will be a Breakout Mode buy and sell signal bar for Monday.
The week oscillated around the week’s open and the 60 minute EMA. It might be able do that again today. If today closes above Monday’s open, the candlestick on the weekly chart will be a bull inside bar. That would be a buy signal bar for next week. Alternatively, if today closes below Monday’s open, the week will be a bear bar and a sell signal bar on the weekly chart for next week.
Can today trend far from Monday’s open? Of course, but that is not likely because the Emini has been telling us all week that it is focused on Monday’s open.
As I have been writing over the past 2 week’s, the September rally looked more like a bull leg in a trading range than a bull trend. The odds are that the September high began a bear leg in the trading range. Logical targets below are the 2 bull trend lines, the 20 week EMA, and higher lows on the daily chart.
Overnight Emini Globex trading
The Emini is down 7 points in the Globex market. Today therefore might open at the higher of the 2 bull trend lines on the daily chart.
After 4 sideways days, the odds favor another sideways day. But, the key force controlling the market today is the weekly chart. Will the bears get the week to close near its low? If so, this week will be a credible sell signal bar on the weekly chart for next week.
Alternatively, will the bulls get the week to close above Monday’s open at 2927.25? If so, the weekly candlestick will have a bull body. That would make higher prices likely next week.
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 is trading down sharply for the 2nd day after testing the top of the 6 month trading range. There is support at the September 10 low around 1.15.
The EURUSD daily Forex chart has a 2nd big bear trend bar so far today. I have been saying over the past week that the September bull breakout would probably reverse down and test the September 10 higher low. However, the 2 day selloff has been stronger than what was likely. But, as long as the selloff stays above the August 15 bottom of the bull trend reversal, the odds are that there will be an eventual break above the 6 month range before a break below.
Whenever a leg down has strong momentum like this, the bulls typically need at least a micro double bottom before they can get a reversal up. Therefore, the daily chart will probably continue sideways to down to around 1.15 for at least another week.
Can this selloff be a resumption of the 2018 bear trend? Yes, but the probability is only 40% at the moment. If there are more big bear days, the probability will go up.
The 6 month trading range has had many strong moves up and down. During each one, I said that a reversal was more likely than a breakout. That is true with this selloff as well.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart sold off 80 pips in a tight bear channel overnight. It is near the support of the September 10 low just above 1.15. In early September, there were many bounces up from around 1.1550, which is another 10 pips below the overnight low. The odds are that today will find support there as well. Consequently, the 5 minute chart is probably near what will be the low of the day.
This week is now an outside down week on the weekly chart. Last week’s 1.1618 low is a magnet above. The bears want the week to close below last week’s low as a sign of strength.
The bulls want the opposite. Since that low is 40 pips above the current price and the bear channel is tight, the odds are against the bulls getting there. At a minimum, they want a significant tail on the bottom of the weekly candlestick. That would require a close at least 20 pips above the low of the day.
Because the chart is near the support of 1.1550, the bulls will soon begin to buy minor reversals up and try to get today’s close to be above last week’s low. The momentum down is strong and therefore the bears will sell rallies. This will result in the tight bear channel evolving into a 40 – 50 pip tall trading range this morning.
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.
Today was the last day of the week, month, and quarter. It was trading range day and the 3rd day in a triangle on the 60 minute chart. It is also the 5th day in a tight trading range. It closed with a bull body and is therefore a buy signal bar for Monday, but the tail on top and 5 day tight trading range makes more sideways trading likely.
Traders are deciding if the September high is the start of a pullback to the 20 week EMA. If there is one more new high, the bears will try to create a wedge top on the daily chart. That would then probably lead to several weeks down to the 20 week EMA.
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.
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.
