Emini open of week is magnet after 8 bull weeks
I will update again at the end of the day.
Pre-Open market analysis
Today is Friday and therefore today’s close affects the appearance of this week’s candlestick on the weekly chart. The past 8 weeks have had bull bodies. Only once in the past 20 years has there been more than 9 consecutive bull bars. Consequently, either this week or next week will probably have a bear body. With the open of the week just below yesterday’s low, it is an important magnet today.
If the bears get a bear body, the Emini will probably pull back for 2 – 3 weeks. In the past 100 years, there have been many times when the weekly chart rallied 10% and had 8 consecutive bull bars. In two thirds of the instances, the Emini down an average of more than 2% both 1 and 2 months later. Therefore, that is likely here.
Bulls want break above triple top
Can the rally break strongly above the triple top on the daily chart? Probably not without at least a 2 – 3 week pullback first.
The “momentum bulls” have kept buying for 8 weeks, correctly betting that the Emini would go higher. Now it is at resistance and many bulls have a big open profit. If there is profit-taking over the next week, the Emini could accelerate down. The momentum bulls are looking for a quick profit and will not allow a loss to grow. The “value bulls” who bought low need to reduce their risk by taking profits.
Finally, the bears see the buy climax and are eager to short. The result can be a quick 2 – 3 week selloff. More likely, the Emini will drift sideways to down for a few weeks. Once traders see that the bears are unable to create a strong selloff, the bulls will buy again. The odds favor a break above the triple top at some point within the next few months.
Overnight Emini Globex trading
The Emini i up 9 points in the Globex session. It therefore might gap above yesterday’s high. Yesterday was a one day pullback in a tight bull channel. It is therefore a one day High 1 bull flag. Since it had a bear body, it is a weak buy signal bar. As a result, there might be more sellers than buyers above its high.
Furthermore, if today gaps above yesterday’s high, the gap will be small. Small gaps typically close in the 1st hour and have little significance.
Even if today gaps up, the body on the weekly chart will probably remain small. The bulls would need a big bull trend day to change that. After 4 trading range days, that is unlikely. Therefore, the fight today will probably be over the size of the body on the weekly chart and whether the week closes above or below its open.
While a strong trend day can come at any time, there is no technical reason for one to form today. More likely, today will be a trading range day. The final hour might have a big move up or down. Both the bulls and bears will try to create some sign of strength at the end of the week. They want to influence the probabilities for next week. A bear body on the weekly chart will make a pullback likely over the next few weeks.
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 rallied for 2 weeks in a micro wedge bull channel to the 20 day EMA. The bears see a higher high double top bear flag. But, it is at the bottom of a 4 month trading range and 80% of trading range breakouts fail. Consequently, a selloff from here is more likely to form a double bottom with last week’s low. The trading range should continue.
Every trading range over the past couple years broke out after about a couple of months. This one has lasted 4 months. Traders should expect a breakout soon. But, until there is a breakout, there is no breakout. Reversals are always more likely. Traders will continue to look for reversals every few days until there are consecutive closes above or below the range.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been sideways for 3 days. Traders are deciding if there will be one more one high in the 4 day rally and then a pullback, or if the pullback is underway. Because the range is tight, day traders are scalping for 10 – 20 pips.
The most important price today is last week’s high of 1.1342. Last week is a buy signal bar for a double bottom with the November low. But, last week was a bear bar and therefore a low probability buy setup. The odds favor more sellers than buyers above last week’s high. However, if the bulls can show signs of strength, they still can get a reversal up. One sign would be a close this week above last week’s high.
The bears always want the opposite. They therefore are selling reversals down from above last week’s high.
So far, both the bulls and bears are scalping. This week has been oscillating above last week’s high in a small range. That will likely continue all day.
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
After an early rally in a wedge bull channel, the Emini entered a trading range. There was a brief, late selloff that tested the open of the day.
The day formed another bull trend bar on the daily chart. In addition, the 2800 Big Round Number and triple top are magnets that are just a little higher.
This week was the 9th consecutive bull trend bar on the weekly chart. That is unusual and therefore climactic. However, there is no top yet and there are magnets above. The odds favor at least slightly higher prices before a 2 – 3 week pullback begins.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
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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.
