Emini weekly doji inside bar after last week’s sell climax
Pre-Open market analysis
The Emini triggered a weak sell signal yesterday buy trading below Wednesday’s low. Therefore, the odds are that the Emini will continue the 6 day developing trading range before deciding on the direction of its next leg. The odds still favor a test below the 2017 close before a new high.
Today is Friday and therefore today’s close will affect the appearance of the weekly chart. While the bears want the week to close on its low and the bulls want it to close on its high, Tuesday’s reversal up after a sell climax creates confusion. Confusion typically leads to a trading range. Yesterday’s close was near the 2763.50 open of the week. The odds are that today will close around there as well. The week then would be a doji bar, which is a sign of a neutral market.
Overnight Emini Globex trading
The Emini is up 10 points in the Globex session. Since yesterday reversed up from a wedge bottom, there is an increased chance of a trend day today. Day traders will be ready for either a reversal up or a break below the wedge bottom.
However, the Emini might continue in it 4 hour trading range for many more hours before there is a breakout up or down. This is especially true since it is near the open of the week and today is Friday. On Friday’s, especially in the final hour, weekly magnets often pull the market. Consequently, if the Emini is within about 10 points of the open of the week after 11 or 12 o’clock today, day traders will look for a reversal to the open. Furthermore, once at the open, there is often either a strong break beyond it or another reversal.
EURUSD Forex double bottom in bottom of 3 week trading range
After 2 big bear days down from a small wedge higher low, the EURUSD daily Forex chart is testing the October 9 low. While it might briefly break below that low over the next week, the odds are against a break below the April 15 low. Therefore, traders will begin to look for a 1 – 2 week leg up in the 3 week trading range. That trading range is in the middle of a 6 month trading range. Since trading ranges resist breaking out, traders will continue to look for reversals after every strong 1 – 3 week move up or down.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been in a 40 pip range overnight. It reversed up from 1 pip above the October 9 low.
The 4 day selloff has been climactic and in a parabolic wedge on the 240 minute chart. Traders will look for the selling to dry up within a few days. They then expect a base and a rally that retraces about half of this week’s selloff.
There is no sign that the 3 week range or the 6 month range is about to convert into a trend. After a sell climax this week down to support, day traders expect a trading range day and then a bounce. The bulls might need a micro double bottom on the daily chart before the next leg up.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
After an early buy climax, the Emini traded down in a wedge bear channel. It spent the 2nd half of the day between the open of the day and the open of the week. Since today closed near both, today was a doji bar on the daily chart and this week was a doji bar on the weekly chart. This is a sign of a neutral market. Traders are still deciding if last week’s selloff was a bear trap or the start of a swing down.
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.