Emini weak buy entry bar after test of October low
I will update again at the end of the day.
Pre-Open market analysis
The Emini had a big gap up yesterday, but sold off in an endless pullback. There was a strong rally from a Final Bear Flag reversal late in the day. It reversed up from a test of last week’s low and the November low.
Yesterday was a Small Pullback Bear Trend day. Because it closed below its midpoint, it is a sell signal bar on the daily chart for today. But, the big tail below makes it a weak sell setup. The bulls see yesterday as a 50% pullback from Monday’s strong rally.
The Emini is still at the bottom of its 2 month trading range. In addition, the close of last year is nearby. As I have been saying for 2 months, the Emini might stay sideways around last year’s close and then decide on the final day of the year whether to close a little below it or a little above it.
Because of all of the big reversals over the past 2 months, traders will continue to look for reversals.
Overnight Emini Globex trading
The Emini is up 32 points in the Globex session. The pullback from yesterday’s strong reversal up is therefore a higher low major trend reversal.
Today might gap above yesterday’s high, which would be good for the bulls. However, if the gap is small, it will probably close in the 1st hour.
The bulls are hoping that Monday’s strong reversal up from below the October low is the start of a yearend rally. If it is, there will be many bull days over the next few weeks.
Bull days tend to form an early low of the day. Consequently, day traders will be looking for an early low. In addition, they will watch to see if the Emini is staying mostly above the EMA. If so, they will be more willing to swing trade their longs.
Alternatively, if the rally reverses down from around Friday’s high, the bears will have a micro double top bear flag on the daily chart. That would increase the chance of a test of the February low. The next few days will likely tell traders if the bottom is in.
I keep saying that the year has been unable to escape the magnetic pull of last year’s close. Therefore, the single most likely outcome is a continuation of the 2 month range and more oscillation around last year’s 2689.75 close.
Day traders have getting good opportunities to swing trade up and down. There is no sign that this is about to end.
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 pullback from breakout above triangle
After reversing down from a breakout above the triangle, the EURUSD daily chart is testing the bottom of the triangle.
The EURUSD daily Forex chart has been in a trading range for 2 months and a triangle for 6 weeks. It broke above the triangle last week and reversed down. However, yesterday’s low was at the bottom of the triangle and today so far has reversed up. That makes the 2 day selloff more likely a pullback from the breakout than a failed breakout and reversal down. In addition, the reversal up is forming a double bottom with last week’s low. This is slightly more better for the bulls, but the bears can get the advantage with even one big bear day.
However, until there is a breakout of the 1.12 to 1.15 range, every strong move up or down will continue to end within a few days. The odds favor reversals until there is a strong breakout.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart reversed up from above yesterday’s low at the bottom of the triangle on the daily chart. There was a bull breakout an hour ago, but a deep pullback. The deep pullback erased much of the bullishness of the breakout.
If today remains an inside day, it will be a Breakout Mode day for tomorrow. The bears will see it as a buy signal bar for the pullback from last week’s break above the triangle. Yet, the bears see Monday and Tuesday as a reversal down and therefore the start of a bear trend. For them, today is a pullback in an early bear trend. Consequently, today is a small bear flag.
If today closes near its high, it would increase the chance of a bull breakout tomorrow. Alternatively, if it closes nears its low, it helps the bears. The fight today will be over today’s close. Bulls will buy selloffs and bears will sell rallies. This will continue over the next several days until there is a strong breakout up or down. The daily chart is at the apex of a triangle. That makes a strong breakout attempt likely within a few days.
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 rallied for the 1st half of the day. It then reversed down from a wedge top just below the 2017 close. It closed near the low and therefore is a sell signal bar for tomorrow. Because the Emini has been sideways for 5 days, there is a reduced chance of a big bear day tomorrow.
Last year’s close has been a magnet all year. The Emini will probably continue to stay near it until the last few days of 2018.
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.
