Emini testing key resistance at 2800 Big Round Number
Pre-Open market analysis
The Emini broke above the 2800 Big Round Number for the 1st time since March. However, the March 13 high of 2811.00 is much more important. It is the top of the 6 month trading range. If the bulls can break 10 – 20 points above it, the rally will probably continue up to a new high.
The Emini has reversed down from 2800 several times since the January high. It is therefore major resistance. The bears want a micro double top with Tuesday’s high and a double top with the March high. However, they need a good sell signal bar or several consecutive bear bars on the daily chart. Either would represent the bulls giving up. But, the bears have neither. Until they get the reversal, traders will keep buying small pullbacks, hoping for a successful breakout above the March high.
Today is Friday and therefore weekly support and resistance are important. The most important prices are the 2800 Big Round Number, the June high, and the March high.
Overnight Emini Globex trading
The Emini traded up to 2807.75 overnight, but then sold off. That is just 4.25 points below the resistance of the March 13 major lower high. This is a reminder of how important that resistance is. The bears want a double top lower high major trend reversal. Since the February selloff was strong, the bears have a 40% chance of a 2nd leg down over the next couple of months. If they succeed, the selloff will begin with a series of bear trend days.
The bulls want the 4 month rally to break strongly above the March high. This would require a series of bull trend days.
The past several days have been mostly sideways. Markets tend to continue to do what they have been doing. Therefore, the odds favor another trading range day.
However, since the daily chart is now at major resistance, there is an increased chance of a series of trend days up or down. Day traders will look for 2 – 5 consecutive strong trend bars up or down on the 5 minute chart as a sign that a trend is underway. If they get a strong move up or down, there will probably be follow-through for at least a few days.
EURUSD Forex 4 day bear leg in 2 month trading range
The EURUSD daily Forex chart is turning down from below the June 14 sell climax high. However, after the extreme parabolic wedge sell climaxes in May, the odds are that the 2 month trading range will continue. The minimum goal is the test of the June 14 sell climax high.
While the daily chart has sold off for 4 days, it is in the middle of the 2 month range. There is additional support at the bottom of the 3 day tight trading range from 2 weeks ago. The odds are that the chart will begin to go sideways here and then have another leg up.
Less likely, this 4 day selloff is a resumption of the May bear trend. But, the bears will need to get consecutive big bear bars to convince traders that the trend is resuming. In addition, they will need consecutive closes below the June low.
Even if they get a breakout below and a 300 pip measured move down, a trading range late in a bear trend is usually the final bear flag. Therefore, traders will expect a reversal back up into this trading range within a couple of months.
Moreover, a reversal up on the monthly chart would be from a parabolic wedge bull flag that began with the February high. The odds would favor at least a couple legs up and last about a year.
Low 2 bear flag on the weekly chart
Today is Friday and the candle stick on the weekly chart will be a bear trend bar in a bear trend. It will be a sell signal bar next week for a Low 2 bear flag. However, it followed 3 bull bars and it is still holding the support of the November 7 low. There are therefore probably more buyers than sellers below this week’s low. Consequently, the 7 week trading range is more likely to continue than be a successful bear flag.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart sold off 60 pips overnight down to support on the daily chart. It has been sideways for the past 5 hours. The bulls will try to form a base for a test back up to at least 1.1750 next week. But, the 4 day selloff was in a tight bear channel. Therefore, the 1st reversal up will probably only last a couple of days. Traders should expect the chart to go sideways in a 100 pip range for at least the next few days.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
The Emini spent most of the day above 2800. However, it failed to break about the March 13 major lower high of 2811.00. The bulls will probably get their breakout next week. Since the daily chart is in a trading range, the breakout will probably disappoint the bulls. Most likely, the Emini will go sideways around 2811.00 for a couple of weeks.
The bears want a reversal down from here. That would create a double top on the daily chart. The bears would then expect a test of the middle of the 6 month range at around 2700. However, the odds are that there would then be another attempt to break above the March 13 lower high.
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.
Hi Al, I know you trade the EUR/USD, you never really mention the Eur futures contract is there a reason why you prefer the EUR/USD over the futures contract?
Most traders now trade Forex markets, especially traders outside of the US. I still sometimes trade the euro futures contract. It does not make a difference. They are almost perfectly arbitraged, and the transaction costs are about the same.
Hey Al as always thanks for putting the time in and helping out as much as you do. I have a quick question about what contract you use. I am using the default ES on TD, and my march highs don’t match up with yours. My high is 2807.25 which was hit last night but you have the high as 2811. I also checked with esu8 and esz8 and those are higer than 2811. I checked regular hours and overnight.
I’m guessing just differences in feeds but i didn’t think that happened with Futures.
I have the same number of 2807.25 and I use Iqfeed data. Thanks
There are many ways to construct a chart, and the charts often have different prices. I use TS continuation charts and never worry about other charts. 30 years ago, I used to look at many charts and there were constant inconsistencies. Paralysis through analysis. I just pick one chart and trade it and never worry about all of the other charts. All charts have lots of good setups, even if key prices are slightly different.
I believe TS back-adjusts their continuation charts on rollover days (not contract expiration days). The result is that prior highs and lows often never existed on any actual contract. This makes the prices on their continuation charts fictitious. You can call them and ask, but I doubt their support will know. But, I have been using those charts for years and they are good enough. Also, since they are the TS continuation chart and I use TS, it is simply easier to use them than to look for something else.
Thank you Al, that makes sense