Emini outside down week testing November low
I will update again at the end of the day.
Pre-Open market analysis
By breaking below last week’s low, the Emini turned this week into an outside down week. The Emini reversed up yesterday from below last week’s low and last month’s low.
Because yesterday was a big bull bar closing on its high, it is a good buy signal bar for today. The bulls want a reversal up from the bottom of the 2 month range.
However, the rally on the 5 minute chart lacked the relentlessness that typically comes at major bottoms. The bulls therefore need several bull days before traders will believe that yesterday was the bottom.
Today is Friday and therefore weekly support and resistance are important. This is especially true at the end of the day today. The most significant weekly price is last week’s low.
The bears want this week to close below last week’s low. That would be a more bearish outside down week.
The bulls want a close above last week’s low. There is a small chance of a huge bull trend today with this week getting back above last week’s high.
Overnight Emini Globex trading
Since yesterday’s was a strong buy setup on the daily chart, today will probably go above yesterday’s high. That will trigger the buy signal.
But, traders will pay careful attention to what happens next. The daily chart is in a trading range for 2 months and therefore buy and sell signals are less reliable. There have been many surprisingly big moves up and down. This increases the chance of a surprise up or down today. One surprise might be that today does not go above yesterday’s high. Also, it could go above and then sell off.
After an overnight pullback in the Globex session, the Emini rallied to around yesterday’s high on this morning’s unemployment report. Today therefore might gap up. If the gap is small, it will probably close in the 1st hour.
Unless there is a strong early rally, today will probably be spend a lot of time around last year’s close, yesterday’s high, or last week’s low today. That means there is an increased chance of a trading range day today, despite yesterday’s strong rally.
Yesterday was a buy climax and therefore there is only a 25% chance of a big bull trend day today. This is true even with the strong buy signal bar on the daily chart. The day after a buy climax has a 75% chance of at least 2 hours of trading range trading that starts by the end of the 2nd hour. There is a 50% chance of some follow-through buying on the open.
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 chart at apex of triangle so Breakout Mode
The EURUSD daily Forex chart has been in a trading range for 2 months. Over the past month, it has formed a triangle. The chart is therefore in Breakout Mode. The bulls have a head and shoulders bottom and the bears have a bear channel.
The EURUSD daily Forex chart has been forming lower highs and higher lows for a month. This is a triangle, which is a Breakout Pattern. The probability of a successful breakout up or down is 50%. Furthermore, the 1st breakout has a 50% chance of reversing. Because the triangle is now very tight, there will probably be a breakout attempt within a week.
Today is Friday and therefore the weekly chart (not shown) is important. Last week was the 2nd buy signal bar in 3 weeks. But, it had a bear body and therefore did not attract many buyers this week. If the bulls can get this week to close on its high, traders will be more willing to buy above this week’s high next week.
The bears always want the opposite. At a minimum, they want today and this week to close below last week’s 1.1403 high.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart was in a tight trading range overnight. It rallied 50 pips to above last week’s high on this morning’s unemployment report. However, it then reversed back down 40 pips.
Traders are paying attention to last week’s high. With the Big Up, Big Down move of the past 20 minutes, today might be a trading range day. Then, toward the end of the session, traders will decide whether to close the week above or below last week’s high.
While any day can be a strong trend day, the overnight price action is neutral. In addition, the daily chart is at the apex of a triangle. Consequently, day traders will continue to scalp until there is a strong breakout up or down.
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.
The Emini reversed down from above yesterday’s high. However, it could not break below yesterday’s low. While it reversed yesterday’s big bull trend, today failed to become an outside down day.
It spent most of the day around last week’s low. Since today closed below last week’s low, this week was an outside down week. That is a sign of strong bears. This week is therefore a sell signal bar for next week on the weekly chart.
However, the Emini is at the bottom of a 2 month trading range. That is a bad location for selling with stops. The bears want a break below this week’s low and then a test of the February low. Since the bulls want the opposite, they will try to create a reversal.
Trading ranges represent balance. Consequently, the probability for anything is around 50%. Therefore, the daily chart does not have a high probability trade up or down.
Since yesterday was a sell climax on the 5 minute chart, the odds favor at least a couple hours of sideways to up trading Monday.
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.
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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.
