Emini weekly sell signal for wedge rally and double top
Pre-Open market analysis
Friday gapped down and triggered a minor sell signal on the daily chart. The daily chart was a wedge rally to just below the March high.
The weekly chart has a small wedge rally and a big double top. Last week was a perfect doji bar on the weekly chart, and therefore a weak sell signal bar. The bears want this week to trade below last week’s low to trigger the sell. However, the prior 2 weeks were big bull bars. Hence, the bears will need at least a couple big bear bars before traders will believe that the bears have regained control.
Furthermore, June 26 – July 5 is one of the more reliable bullish times of the year. This implies that the Emini often sells off a little before June 26. This week might be the start of this seasonal pattern.
Overnight Emini Globex trading
The Emini is down 17 points in the Globex market. It might therefor gap below last week’s low and trigger a sell signal on the weekly chart. Consequently, there is an increased chance of a bear trend day today. Furthermore, there is also an increased chance of a bull trend day whenever the bears try for a bear breakout. The past 2 weeks have spent a lot of time in trading ranges on the 5 minute chart. Because of the location and chart patterns on the daily and weekly charts, there is an increased chance of a trend day today.
EURUSD Forex market trading strategies
The EURUSD daily Forex chart is in a bear trend. Yet, there is better than a 50% chance that the daily chart is now also in a trading range. This is because it had consecutive sell climaxes that stopped at the November 7 major higher low. In addition, the early June rally from support was strong evidence that the daily chart is now in a trading range.
The bears hope that last week’s selloff is a resumption of the bear trend. But, the bear had a strong rally up to the June 14 high. When a bear trend resumes down strongly, like it did last week, but stops at the bear low, it might be testing that prior low. This means that last week’s selloff has at least a 50% chance of being a strong test of the bottom of the bear trend instead of a breakout below a bear flag and a resumption of the bear trend.
This is especially true since the next day, Friday, was a bull day. Successful bear breakouts usually do not stop at support. Furthermore, when they do, the next day is typically at least a small bear day. Here, Friday was a bull bar closing near its high. If the bulls get 3 or more consecutive bull days or a micro double bottom, there will be a 60% chance that Thursday’s bear breakout will fail.
After consecutive sell climaxes to support, a 2 – 3 month trading range is likely. The minimum target for the top of the range is last week’s high, which is the neck line of the double bottom. If the bulls break above that, they will look for a test of the May 14 high around 1.2000.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart rallied 60 pips overnight. It formed a double bottom with Friday’s low. The bulls want a break above Friday’s high, which is the neck line. They then want a measured move up. If they get it, they will then try to rally to the top of Thursday’s sell climax high over the next 2 weeks. Their minimum goal is a 2nd bull day on the daily chart. Therefore, the open of the day will be a magnet today.
The bears will try to get the day to close below its open. Today would therefore be a sell signal bar on the daily chart for tomorrow. The bears want a double top with Friday’s high on the 4 hour chart, which would be a bear flag. They hope that a breakout below would also strong break strongly below the May 29 low. More likely, a bear breakout will fail and form a micro double bottom on the daily chart.
There is almost a 50% chance that last week’s selloff will lead to another leg down on the daily chart. The bears will therefore be ready for big bear trend days over the next week. If they fail to get them, they will buy back their shorts. This will lead to bull trend days and a rally to last week’s high. The top of the most recent sell climax is always the 1st target for the bulls.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Today triggered a weekly sell signal by falling below last week’s low. Since the weekly sell setup was weak, there were buyers below last week’s low. Today rallied and entered a trading range. The bears might try to trigger the weekly sell signal again tomorrow by going back below last week’s low, but the odds are against a big selloff. Most days are continuing to have mostly trading range trading.
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.
Training myself to take the setups you highlight on the charts everyday via the blog post has been helping. Would you say you are marking them up from an aggressive-always-in perspective?
I say that because I find myself struggling whether to go for 2 points or 4 points. Or, maybe stay in at all times, taking many small wins and small losses until I catch 1 or 2 swings for the day.
It seems you are marking entries where one side would be “giving up”. Does that mean we’d be better off just staying in the market until the other side “gives up”? Or, better to take 2 points when you can get it and simply look for the next trade?
The entries that I post are where an Always In trader would enter if he was flat. Any trade is good enough for a swing. Many are good for scalps. Many swing traders would enter as a swing, but convert to a scalp if the trade was not unfolding as he expected.