Emini parabolic wedge buy climax at 200 day moving average
I will update again at the end of the day.
Pre-Open market analysis
The daily chart is testing the 200 day moving average. That chart also now has a parabolic wedge bull channel over the past 5 weeks.
Furthermore, the 8 consecutive bull bars on the weekly chart is unusual and therefore unsustainable. That makes it a buy climax. Consequently, the odds favor a pullback lasting at least 2 – 3 weeks. Yesterday might be the start, but the momentum up is strong enough for the Emini to go higher for several more days.
The Emini formed a bear trend reversal bar yesterday on the daily chart. It is a sell signal bar for today. But, it is only a doji and therefore a low probability top. If the bears begin to form bear trend days over the next few days, the odds will be that a 100 – 200 point correction has begun.
Since yesterday was a pause in the bull trend, it is a High 1 bull flag. However, a bear bar at the resistance of the 200 day moving average and in the 3rd leg up in a wedge is a weak buy setup. Consequently, the odds are against a big bull day.
Overnight Emini Globex trading
The Emini is down 1 point in the Globex session. Rather than triggering a sell signal by going below yesterday’s low, today might go above yesterday’s high. If today does go above yesterday’s high, there will probably be sellers not far above.
When there is a weak sell signal bar, there is often a 2nd sell signal bar within a day or two. Therefore, there is an increased chance that any rally today will reverse back down and form another bear day today (close below the open). That would be a micro double top on the daily chart.
Most of the trading over the past 2 days has been within trading ranges. Given that a big trend up or down is unlikely, today will probably also be mostly a trading range day. Because of yesterday being a sell signal bar in a buy climax, there is an increased chance of a bear trend day today.
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 yesterday formed a big bear trend day closing near its low. It was a Low 1 bear flag. The bears see is as a pullback from the breakout below the 4 month trading range. Today therefore is the entry bar for the bears.
But, the breakout is not yet far below the 4 month range. In addition, there have not been consecutive bear days closing below the range. Therefore, the probability of a successful breakout is only slightly better than 50%. If the bears can get the day to close near its low, the odds of a successful breakout will go up. They therefore will sell rallies today.
The bulls see the selloff from the January high as 2 legs down in a trading range. Because the 2 week selloff has been strong, they need a micro double bottom to get a reversal up. Consequently, today is a potential buy signal bar for tomorrow.
The bulls need a strong buy signal bar to make traders willing to buy. They therefore want today to close near its high. Day traders should therefore look for buy setups and a close near today’s high.
Overnight EURUSD Forex trading
So far today, the bulls have been winning. The day is currently a bull trend bar on the daily chart. There has been a 40 pip rally over the past 10 minutes on the 5 minute chart.
If the bulls can maintain the rally, the odds will favor higher prices over the next few days. They need to buy any 20 pip selloff and keep the day near its high.
But, if the bears can reverse this rally back down to below the midpoint of the day’s range, the bears will probably of a successful breakout below the 4 month range will increase.
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 a big gap down, the Emini rallied. Because it formed a bull trend bar on the daily chart, today is a High 1 bull flag. It is a buy signal bar for tomorrow. But, it was a doji day and therefore a weak buy signal bar. Also, the parabolic wedge buy climax will probably limit the upside. There will probably be sellers not far above this week’s high.
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.
