Emini monthly and weekly sell signals after Trump’s healthcare failure
The Emini gapped up to the 60 minute and daily moving averages and last week’s low. This is resistance and today will probably be a trading range day. Therefore, the bulls need a Buy The Close rally to convince traders that today instead will be a bull trend day. Since the day began with a 4 bar tight trading range, the market is telling day traders that today will probably have a lot of trading range trading.
Since a trading range day is likely and the Emini is around resistance, the odds are against an early sustained rally. More likely, it will begin a sideways to down swing by the end of the 1st hour or two. In addition, since a trading range is likely, legs up or down will probably last 2 – 3 hours.
Pre-Open market analysis
The Emini sold of strongly yesterday to below the open of the month and close to 2400. The sell climax was extreme, and the Emini reversed up into the close. Big Down, Big Up creates Big Confusion, which means that a trading range is likely for most of today.
Today is the end of the week, and therefore weekly support and resistance is important. Since last week was a sell signal bar, the bears want this week to close below the low of last week.
Since today is also the last day of the month, monthly support and resistance is also important. The bears want the month to close below the open of the month. That would therefore create a sell signal bar.
The bulls would like the month to close above its open. Hence, they would have a bull body in June. This would therefore weaken the sell signal. Furthermore, they want the month to close above its midpoint. That would therefore prevent traders from seeing June as a reversal bar.
Today will probably test both last week’s low and the month’s open. It therefore might remain in a range between these levels until the final hour. Because both are important magnets, there is an increased chance of a trend
in the final hour to test one of these levels.
Bear leg in trading range on weekly chart
Because the weekly and monthly charts are so strong, the odds are that any selloff will be a bull flag on those charts. Therefore, the selloff would be a bear leg in a trading range.
Since a bear leg in a trading range is not a strong bear trend, the selloff will probably repeatedly disappoint the bears, even if it lasts several months. Consequently, every time the bears do something good, the odds are that the follow-through will be disappointing. For example, yesterday had a big bear trend, but it reversed up 20 points late in the day.
Overnight Emini Globex trading
The Emini is up 5 points in the Globex market after yesterday’s late reversal. The reversal up was strong enough so that bulls will buy the 1st reversal down today. Therefore, the odds are against a strong bear trend in the 1st few hours. Yet, the low of last week and the 60 minute moving average are resistance just a little above the current Globex price.
Furthermore, the selloff was in a tight bear channel on the 60 minute chart. Therefore the bulls will probably need at least a micro double bottom on that chart if they are going to completely reverse yesterday’s selloff. Consequently, there will probably be a test back down either today or early next week.
Yesterday’s Big Down and Big Up creates Big Confusion. Since confusion is a hallmark of a trading range, the odds favor a trading range day today. Because the legs down and up were big, the legs up and down will probably be big enough for swing trades.
EURUSD Forex market trading strategies
After a 3 day strong breakout, the odds are that the EURUSD chart will pause. When a breakout is strong like this, the bears usually need at least a micro double top on the daily chart before they can create a significant reversal. Therefore, the bulls will probably buy the reversal down. Hence, the 1st attempt to reverse down will likely be minor and a become a bull flag. Therefore the best the bears will probably get over the next week is a small trading range.
Overnight EURUSD Forex trading
The EURUSD market pulled back 50 pips over night. In addition, it has been in a 30 pip range for the past 6 hours. While the odds favor a trading range for a few days after a strong bull breakout, bulls will buy pullbacks for a test of yesterday’s highs. Without a strong top, bears will only scalp. Since a reasonable top would take at least several days to form, the downside risk over the next few days is small.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
The Emini formed a doji inside day today. This week is a sell entry bar on the weekly chart. Furthermore, this month is a sell signal bar on the monthly chart. The odds are that the Emini will pull back for 2 – 3 months and 100 – 150 points soon.
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.