Emini parabolic wedge buy climax ending in sell zone
I will update again at the end of the day.
Pre-Open market analysis
After Monday’s bull trend, yesterday was a trading range day. The Emini is
just above the December 12 crash high. This in the sell zone on the daily chart.
Since yesterday was a bull doji, it is a low probability sell signal bar. The bears will probably need a micro double top before they can get a selloff lasting more than a couple days.
The weekly chart now has 7 consecutive bull bars. That is rare. Consequently, unless today is a big bull day, Friday will probably close below Monday’s open. That would create a bear bar for this week.
After a strong 7 week rally, the bulls will soon take some profits. They want to buy again, but don’t yet know how strong the bears are. The bulls typically give the bears about 10 bars to try to create a bear trend. If the bears are unsuccessful, the bulls will buy again.
Therefore, if this week is the top of the buy climax, the Emini will probably pull back for 2 – 3 weeks. A reasonable target for the bears is the trading range from 3 weeks ago, between 2,600 and 2,650.
Overnight Emini Globex trading
The Emini is up 1 point in the Globex market. Day traders know that the daily chart is in a buy climax. Furthermore, there is a wedge top on the 60 minute chart. However, that chart might get 1 more brief leg up before beginning to pullback.
The nearest major support is the 2 week trading range from late January. It is between 2,600 and 2,650. Therefore, the bears expect about a 100 point selloff to begin within a week. As a result, day traders will begin to look for sell signals on the 5 minute chart. Traders know that there is an increased chance of bear days over the next couple of weeks.
Less likely, the buy climax will continue up to the triple top on the daily chart at around 2,800 without pulling back 1st.
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 50% pullback to middle of 4 month trading range
The EURUSD daily Forex chart sold off for 5 days. It has retraced 50% of the 2 week rally.
Furthermore, it fell below last week’s low. However, last week was the 2nd consecutive bull bar on the weekly chart. It is therefore a weak sell signal bar. Consequently, there are probably more buyers than sellers below last week’s low. As a result, the 5 day selloff will probably end today.
Because the selloff is in a tight bear channel, the bulls might need a micro double bottom before they can rally back to the top of the 4 month trading range. Typically, they 1st have to stop the selling for 2 – 3 days before they can start a rally. Therefore, the daily chart will likely go sideways today and maybe tomorrow.
The bears need a strong break below the December low. Without that, traders will assume that the 5 day selloff is just another bear leg in a trading range. They expect that it will soon lead to a bull leg.
Overnight EURUSD Forex trading
The EURUSD 60 minute chart has been in a Spike and Channel Bear Trend for 5 days. The bear channel has lasted for 3 days. A bear channel is a bull flag. There is a 75% chance of a bull breakout.
The channel is also present on the 5 minute chart. Channels on the 5 minute chart typically end by the 3rd day. Therefore, day traders will expect the 5 minute chart to begin to go sideways today, and rally at least 50 pips by the end of tomorrow.
Because the moves up and down have been small for over a week, day traders are continuing to scalp. They expect the bear channel to convert into a trading range today. As a result, they will become as willing to buy as sell. This is unlike the past 5 days when they were mostly looking to sell.
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
Today was a trading range day. It was an inside day and the 2nd consecutive doji day on the daily chart. Because of the buy climax and the bear body, it is a sell signal bar for tomorrow. Since the 7 week bull channel is tight, this is a minor sell signal. The best the bears will probably get is a a couple weeks down. Furthermore, the Emini might have to go sideways for 5 – 10 days before the profit taking begins.
On the 5 minute chart, the bears are still on yesterday’s higher high major trend reversal. Today, they had a double top lower high major trend reversal. But, the chart is sill in its 2 day trading range. While a 50 – 100 point reversal down is likely to begin this week or next, the bears do not yet have a breakout below the 2 day trading range. The odds therefore favor more sideways trading or a little more up.
The Emini has been above the 20 bar EMA on the 60 minute chart for more than 40 bars. That is extreme. Therefore, the Emini will likely pull back to the EMA tomorrow.
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.
Just wanted you to know how valuable the “Yesterday’s Setups” charts are, Al.
They really help validate/invalidate my own analysis and help me tighten down my understanding of what I’m learning.
Thanks for all the teaching.
Brad