Day trading outlook for tomorrow’s Emini price action: overbought on the daily chart
Friday is the last day of the month and therefore tomorrow and Friday will affect the appearance of the monthly chart. The daily chart is overbought since it has had 10 days without a pullback (a 10 bar bull micro channel).
If tomorrow gaps down, the there would be a 2 day island top. The target would be the gap around 1900, which is also the August low. Since the September high is only about 35 points higher, it is possible that the Emini rallies to above that all-time high by the time Friday closes. This would create an outside up bar on the monthly chart. Since the monthly chart is so overbought, that bar would more likely be a sign of exhaustion than the start of a new leg up.
A 10 day bull microchannel on the daily chart means that the buying pressure is strong. This increases the chances that the first reversal down will be bought, even if the Emini gaps down tomorrow. The Emini is at the top of a 4 – 12 month trading range, and unless it breaks above the September high, the odds are that it will soon reverse back down to the middle of the range, around 1900 and the August low.
Premarket price action analysis
See yesterday’s intraday market update report for today’s premarket analysis. Once there, scroll down to the heading, Day trading outlook for tomorrow’s Emini price action.
See the weekly update for a discussion of the weekly chart and for what to expect going into next week.