Emini testing December crash high
I will update again at the end of the day.
Pre-Open market analysis
The Emini rallied strongly on yesterday’s FOMC announcement. However, it stalled just below the December 12 crash high. I have been writing for weeks that this was an important magnet. The bears want a big double top bear flag on the daily chart.
The bulls, however, created a strong 6 week rally. Consequently, they know the 1st reversal down will probably be minor. Therefore, there is not much downside risk over for the rest of the week.
By going above last week’s high, the Emini triggered a weekly buy signal. But last week was only a doji. This is a weak buy signal bar. Furthermore, the weekly chart is at the EMA and the daily chart is at the December 12 high. Both are resistance. As a result, the Emini will probably stall here for a few days.
Overnight Emini Globex trading
The Emini is unchanged in the Globex session. Yesterday reversed down from just below the December 12 high. That was the top of the crash. I have said several times that it was a magnet.
If the rally begins to falter, which is likely, the bulls will take profits. In addition, the bears will begin to sell. Both know that about a 50% pullback to around last December’s low and 2500 is likely to begin in February. The rally will probably stall here for a few days.
Less likely, the rally will continue up to the November high and 2,800 without more than a small pullback.
The chart is now in the sell zone, but there is no top yet. It might go sideways for 1 – 2 weeks before it begins to pull back. In addition, it might go a little higher as well. Finally, because the Emini is at an important price, there is an increased chance of a big trend day up or down.
Because yesterday pulled back only slightly from the December 12 high, the Emini will probably test that high again today.
Since yesterday was a buy climax, the bulls are probably exhausted. This typically results in at least a couple hours of sideways to down trading that starts by the end of the 2nd hour.
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 trading range but getting higher lows
The EURUSD daily Forex chart broke back above its 4 month trading range again overnight. While the chart is still in a 4 month trading range, there are now 3 higher lows. In addition, this is the 2nd breakout above the top of the range. A trading range mostly has about a 50% chance of a breakout up or down. However, the odds now slightly favor a bull breakout.
The bears need a breakout below the November low. After a 5 day rally, they 1st will need at least a micro double top. That means that they would need a pullback and then a test of the top of the current leg. Consequently, traders will buy the 1st reversal down.
The daily chart is in Breakout Mode. Therefore, a 200 – 300 pip breakout up or down can come at any time. Furthermore, it could be surprisingly strong. Traders know that this trading range has lasted longer than most over the past 2 years. As a result, they expect the breakout soon.
But, until there is a breakout, there is no breakout. The probability only slightly favors the bulls. One or two huge bear days would make the chart neutral again or even bearish.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart broke again above the November high last night. That has been the top of the 4 month range. However, the breakout was small and the market reversed down 40 pips. Because the 5 day rally has been strong, the bulls will buy this selloff, even if it falls 100 pips from the overnight high. Consequently, the downside risk over the next couple days is small.
Because the overnight breakout was small and reversed down, the bulls lack conviction. In addition, the bears are betting that the 4 month range will continue.
The overnight trading range is a sign that both bulls and bears are scalping. They are unsure if the rally will continue a little higher or begin to pull back.
Uncertainty means traders bet on reversals and scalp. This overnight trading range price action will probably continue today.
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
The Emini broke above several important resistance levels today. The first was the December 12 stock market crash high. Next, it broke back above the 2017 close. The Emini oscillated around it throughout 2017. This made it clear that it was significant. Finally, it broke about the 2,700 Big Round Number. It pulled back later in the day, but closed back on the high.
The rally has been strong, but the bulls will begin to take profits at these resistance levels. In addition, the bears will begin to sell. Therefore, the odds favor a 50% pullback beginning within a couple weeks.
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.
