Emini reversed last week’s outside down bar and again at 2800
I will update again at the end of the day.
Pre-Open market analysis
The Emini rallied for the 4th day yesterday to just above last week’s high. It has now totally erased that selloff. I have been writing for the past 2 months that the Emini would probably pull back for 2 – 3 weeks after the weekly buy climax. This week could be the end of the pullback.
But, the bulls still need to break strongly above the October high before traders will believe that the rally will make a new high. Furthermore, the rally is already extreme and it is a leg within a 15 month trading range. Also, the Emini is at resistance. All of this makes a bigger pullback likely, even if the rally continues for another couple weeks.
The 4 day rally is unsustainable and therefore a buy climax. That increases the chance of a 1 – 2 day pause. This is especially true since the bulls have already reached their target of last week’s high.
The next decision is how the week will look once it closes on Friday. Since the bulls have met their goals, the Emini might go sideways until the final hour of Friday. Then, traders will decide if they can close the week on its high and above last week’s high.
Overnight Emini Globex trading
The Emini is up 1 point in the Globex session. Yesterday began as a bull trend but spent most of the day in a trading range. An early rally today that reverses down from around yesterday’s high could form a major trend reversal on the 5 minute chart. The minimum goal for the bears would be at least 2 hours and 2 legs down.
In strong bull trends, surprises are more likely to be rallies than selloffs. Consequently, there is an increased chance of a strong breakout above the 2018 triple top on the daily chart. More likely, though, is a pullback beginning today or tomorrow.
Since yesterday was sideways for the final 5 hours and the Emini is at resistance, today will probably be sideways as well. Traders will likely wait until next week to decide on whether this rally will break strongly above the October high.
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 4 days from a wedge bottom. A rally from a wedge bottom typically has a 2nd leg up. Therefore, the odds are that the bulls will buy a 3 – 5 day pullback. The 2nd leg up should test today’s high and the top of the 3 month bear channel.
The bears want another lower high and then a new low. However, after 4 bull days, they will probably need a micro double top or a double top. Consequently, the 1st reversal down will probably form a higher low.
The 4 month trading range continues to have strong legs up and down. Traders are simply waiting for news from Brexit. Until then, they will keep looking for 3 – 5 day legs and then reversals.
Overnight EURUSD Forex trading
The EURUSD 5 minute chart sold off 40 pips overnight from above yesterday’s high. Today will probably be a bear day after a 4 day rally. Therefore, traders will sell rallies today.
The overnight bars are small and have prominent tails. This indicates a lack of energy. Day traders are looking for 10 pip scalps.
There will continue to be occasional 30 pip breakouts on minor Brexit news. But, until there is a major announcement, day traders will look for reversals.
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
As I said was likely, today was a trading range day. On the open, I said that today would probably close below the open after 4 bull days. That is because the Emini has been forming a bear day after every few bull days all year. Today was the 1st bear day in 4 days, but it was a trading range day. Tomorrow will probably also be quiet.
Tomorrow is Friday and weekly support and resistance are important. The most important price is last week’s high. Last week was a strong bear bar on the weekly chart. This week broke above its high. If the Emini is within about 5 points of last week’s high after 11 a.m. PST tomorrow, it will probably rally to test it.
Less likely, today will break strongly above the 2018 triple top or reverse down strongly. Traders would need a very big day up or down to change the week’s current appearance, and that is therefore unlikely.
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.
