Posted 7:49 am PST.
For today’s intraday market update, the most important price action in the Emini and stock market is bull trend reversal from a wedge bottom, just above 1900. The 60 minute chart has a lower low major trend reversal. Day traders bought as the reversal was forming and they bought pullbacks. Unless the bears can create some price action that is comparably strong, this will be the controlling price action of the day and day traders will look to buy pullbacks.
At the moment, the bears are creating an expanding triangle bear flag with yesterday’s trading range, and a wedge top today. However, the rally is strong enough so that the best the bears will probably get is a trading range down to the 1910 area. The low of the open will probably hold all day.
The market rallied 13 points above the open. For today to be a bear trend day, the bar on the daily chart would have a tail on top that is 13 points tall. That is extremely unusual and therefore very unlikely. The day will probably either be a bull trend day or a trading range day.
The candle on the weekly chart closes on Friday. Last week had a strong bear reversal, but it might simply be a test of the weekly moving average. The appearance of this week’s candle is important. The bears want strong follow-through to confirm last week’s reversal. At a minimum, they want a bear body on the weekly bar one it closes on Friday. The also want the bar to close below last week’s close and low and below the moving average. They would prefer the bar to be a big bear bar that closes far below the moving average.
The bulls want the opposite, and especially will try to create a big bull reversal bar by the close of Friday. So far, the bar is small, but traders will be ready in the final hour or two on Friday for a strong move up or down if one side appears to be winning at the end of the week.
See the weekly update for a discussion of the weekly chart.