Emini sell climax with consecutive closes below the 2017 close
Intraday market update: Friday October 26, 2018

Emini sell climax with consecutive closes below the 2017 close

I will update again at the end of the day.

Pre-Open market analysis

The Emini reversed up in a bull channel yesterday, but collapsed late to end the day again below last year’s close. This is the 2nd consecutive close below that key price and it increases the chance for more sideways to down trading over the next couple weeks.

Since yesterday was a bull doji inside bar on the daily chart, it is a weak sell signal bar for today. Furthermore, it was the 7th day in a bear micro channel. That is unsustainable and therefore climactic. The odds are that The Emini will soon begin to go sideways for a few days.

Today is Friday and weekly support and resistance can be important, particularly in the final hour. The most important price all year has been last year’s close. Other magnets are the low from 2 weeks ago and this week’s low.

Overnight Emini Globex trading

The Emini is down 24 points in the Globex session. It might therefore gap down. Whether or not it does, yesterday was a bull doji inside bar on the daily chart. It is therefore a weak sell signal bar for today. Consequently, there will probably be buyers not far below.

There is a wedge bottom with the October 11 (or 18), 23, and 24 lows. This represents a series of sell climaxes. It therefore increases the chance of exhausted bears. If the bears are exhausted, they will begin to take some profits and look to sell rallies at resistance. This would result in a 1 – 3 day bounce early next week. The bulls hope that yesterday’s rally was the 1st leg up and that the selloff was the pullback from that 1st leg. They will try to begin a 2nd leg up today.

The bears are aware of the exhaustive selling and know that a 1 – 3 day bounce is likely. However, they will continue to try to create new lows until they are unable. Once a critical mass of bears begins to take profits on selloffs, the bounce will begin.

This bounce will probably start today or Monday. If so, the reversal up could be abrupt, or begin with a several hour trading range and then a bull breakout.

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 daily Forex nested parabolic wedge after big double top

The EURUSD daily Forex chart gapped down on Wednesday. The bears want a 500 pip measured move down below the August 15 neck line of the big double top. However, the bulls want a reversal up from above that low.

After the strong rally to the September 24 high, the EURUSD daily Forex chart had only a 40% chance of a break below the August 15 low and a 500 pip measured move down. The probability of a strong breakout below that low is now about 50%. However, yesterday had a prominent tails and today so far is small. Therefore, the selloff is losing momentum as it approaches the bottom of the 6 month trading range.

But, the 5 day selloff is in a bear micro channel. Consequently, the bulls will need a micro double bottom before they can get a 2 week rally back to the most recent lower highs.

Overnight EURUSD Forex trading

The EURUSD 5 minute Forex chart sold off 50 pips overnight. The bear runs over the past 6 days are getting smaller, which is consistent with the parabolic wedge on the daily and 240 minute charts. This increases the chance of a day or two rally early next week.

Also, the overnight selloff was in a Spike and Bear Channel on the 5 minute chart. That typically evolves into a trading range. The 1st target is the start of the wedge bear channel, which is the lower high from 4 hours ago at 1.3665.

Because today is Friday, its behavior affects the weekly chart. While the bears want the week to close below the August 15 low, that is unlikely. This is because the momentum down is waning and the 5 minute chart is in a Spike and Channel bottom pattern.

The bulls will not be able to do anything to erase the bearishness of the 1st 4 days of the week. Even if there is a reversal up on the 5 minute chart, it will be small relative to this week’s selloff.

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 up today from a wedge bottom. There is an 8 bar bear micro channel on the daily chart. Since that it rare, it is unsustainable and climactic. The odds are that Monday will trade above today’s high or that Tuesday will trade above Monday’s high. That would trigger a wedge bottom buy signal. A reversal up from a sell climax typically has at least 2 legs up.

But, the 8 day bear micro channel is also a sign of strong bears. Therefore, the initial reversal up will probably have a pullback within a couple of days. The downside risk next week is not great after the 4 week sell climax down to the close of last year. The odds favor a 1 – 2 week rally.

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.

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