Emini weekly buy signal bar but at resistance
I will update again at the end of the day.
Pre-Open market analysis
Last week was a bull doji doji inside bar on the weekly chart. Since it followed a strong 4 week rally, last week is a buy signal bar on the weekly chart. But, it was a doji and the chart is at the 20 week EMA. Therefore, this is a weak buy setup. There are probably sellers not far above.
The Emini has rallied in a parabolic wedge buy climax on the daily chart over the past 4 weeks. This typically results in exhausted bulls and about a 10 bar pullback. Traders are deciding if the pullback has begun or whether there will be one more brief high before the pullback begins.
The December 12 high is a magnet above. That was the start of the December crash. Therefore, the bulls might be able to break above it before they finally exhaust themselves.
Can the rally break strongly above that December 12 high? Unlikely. The odds favor a retracement of at least a third of the January rally beginning within a couple weeks.
Overnight Emini Globex trading
The Emini is down 16 points in the Globex session. If it gaps down today, it will create a one day island top. Island tops and bottoms are minor reversals. I said that on Friday when Friday gapped up and formed a 2 day island bottom.
The Emini has been sideways for 6 days. It spent most of the time on the 5 minute chart within trading ranges. That is likely again today.
With the gap down, the bears hope that today will be the start of a small double top with the January high and a bigger double top with the December 12 high. However, the bulls hope that today is simply a pullback from Friday’s break above a 4 day bear flag.
The 6 day trading range is a sign of balance. Traders are deciding if a 50% pullback from the January rally has begun or if there will be a brief break above the December 12 high first. Until there is a strong breakout, traders will expect that trends up and down will last a couple hours and then enter a trading range or reverse for a couple hours.
Friday’s setups
Here are several reasonable stop entry setups from Friday. 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 chart is reversing at bottom of 4 month trading range
The EURUSD daily Forex chart has had strong legs up and down in a trading range for 4 months. In a trading range, there are many strong legs up and down. However, most breakout attempts fail. Traders therefore look for reversals.
The 3 week selloff to the bottom of the range ended with Friday’s reversal up. Last week was a buy signal bar on the weekly chart. When the EURUSD traded above last week’s high last night, it triggered the buy signal. However, there has been no follow-through buying. The bulls need a big bull bar on the weekly chart this week to convince traders that the buy signal is significant. So far, it is not.
3 week bear channel so minor reversal up
Since the 3 week selloff was in a tight bear channel, the bulls will probably need to create some bull bars this week before they can get a reversal up to the top of the range. Therefore, the daily chart will probably be mostly sideways for a few days. Then, the bulls will try to create a small double bottom and then a rally to the top of the range.
The bears hope that Friday’s reversal is just a test of the January 18 high and a 50% pullback. They want a reversal down in the next few days. That would be a double top bear flag with that high. The neck line is last week’s low. They want a strong breakout below and then a 100 pip measured move down.
If they get their strong breakout, it would also be a break below the 4 month range. They therefore would expect the selloff to continue down for a 300 – 400 pip measured move based on the height of the 4 month trading range.
Traders know that every trading range over the past year had a successful breakout after about a couple of months. While they will continue to bet on reversals, they will quickly switch to trend trading if they see a couple consecutive closes above or below the range.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been sideways since late Friday. Because Friday might be the start of a 2 week rally, the bulls want follow-through buying today. At a minimum, they want a bull bar on the daily chart. Therefore, they will buy dips below today’s open today, trying to get today to close above the open.
The bears always want the opposite. They therefore will sell rallies to above the open, hoping to get the day to close below the open. Today would then have a bear body and be a sell signal bar for tomorrow.
Because Friday was such a strong reversal up from support, the bulls have a better chance of a bull close on the daily chart today. Furthermore, if today is a trend day, up is more likely than down.
However, the past 20 hours have been in a tight range. This tells us that traders have been scalping. Until there is a strong breakout up or down on the 5 minute chart, they will continue to scalp 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
By gapping down, today turned Friday into a 1 day island top. There is now a double top and a double bottom over the past 7 days. This is Breakout Mode.
Today gapped down, but reversed up. It is a buy signal bar for tomorrow.
Even if there is a new high, the Emini will probably test the February 2018 low within a month.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
Trading Room
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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.
Admin,
Usually when I open a posted chart it opens to a full page view. Today the top 2 charts open but today’s emini chart does not. Is this a problem at my end?
Thank you
I deleted and reinserted the chart, and it appears to work now.
Hi Al,
your recent comments of strong/weak setups on the charts are really helpful. Thank you.