Emini has small double bottom and top so Breakout Mode
I will update again at the end of the day.
Pre-Open market analysis
Yesterday was the 5th consecutive doji day in a 7 day tight trading range, There is both a small double top and double bottom. This is Breakout Mode.
The Emini is just below the December 12 top of the crash. That is a magnet above. In addition, the January rally was strong. Consequently, a bull breakout is slightly more likely than a bear breakout.
However, the January rally was a buy climax. Even if the bulls break above the December lower high, the Emini will probably retrace about 50% of the 5 week rally by the end of February.
Because of the dojis and tight trading range, the odds favor more sideways price action. There is no sign of an impending breakout yet.
Overnight Emini Globex trading
The Emini is up 11 points in the Globex session. It therefore might gap up above yesterday’s high. That would create a 2 day island bottom.
If the gap is small, it will probably close within the first hour. However, the daily chart is in a bull bull flag. Therefore, even if the gap closes, there is still an increased chance of a bull trend day.
Since the past 5 days were doji days, traders will need to see a strong early breakout up or down before concluding that today will be a trend day. Without that, the odds favor at least one swing up and one swing down.
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 1st leg up after test of support
The EURUSD daily Forex chart has been sideways for 3 days after reversing up from the bottom of the 4 month trading range. Legs up and down in trading ranges typically subdivide into at least 2 smaller legs. Therefore, the odds are that there are buyers below at around a 50% retracement. Then, the chart will likely have at least a small 2nd leg sideways to up.
While all trading ranges over the past year have broken out within a couple of months, this one is different. This is because traders are waiting for the resolution of the Brexit problem.
Traders believe the current price is fair. They expect that Brexit will lead to a strong breakout up or down. Furthermore, there will probably be a 300 – 400 pip measured move on the breakout. Until there is a breakout, they will continue to look for reversals every few days.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been in a 20 pip range for the past 7 hours. The moves are so small that it is difficult even for scalpers to make money. Day traders are trading reversals, looking for 10 pip scalps.
The daily range has been shrinking for 4 days. Also, the past 3 days have been sideways in a tight trading range. Traders know that the odds favor a 100 pip pullback within a few days.
However, they also know that the rally might continue a little higher before the pullback begins. They therefore will scalp until there is a breakout up or down from this 3 day tight range. And, once there is a breakout, they expect it to be small and reverse within a few days.
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 Emini rallied strongly on the FOMC announcement. It stalled just below the December 12 start of the stock market crash. It might go sideways for a few days. The bears want a double top with that high. However, the momentum up has been strong for 4 weeks. Consequently, the bears will likely need several bear bars before they can get a reversal down.
The bulls want a strong breakout above that high. However, rallies typically stall once they reach the top of the most recent sell climax. The Emini will therefore probably be sideways for a few days.
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.
