Emini 50% retracement of last week’s bear trend
Pre-Open market analysis
The Emini formed a trading range yesterday after Tuesday’s rally. That rally topped out at a 50% retracement of the 2 week selloff. After yesterday’s lack of follow-through buying, the bulls need a bull day today.
Their problem is the bull trend line on the daily chart. It is around Tuesday’s low and the Emini still might get there this week by going sideways or down. Consequently, to make traders believe that Tuesday was an adequate test of that support, the bulls need a strong rally today.
Overnight Emini Globex trading
Today is rollover day in the Emini. Most traders will continue to trade the September contract today because it will have much greater volume. However, the continuation charts are now based on December.
The Emini is up 10 points in the Globex market. It therefore might gap above yesterday’s high. The bulls need a strong rally today and tomorrow to confirm Tuesday’s micro double bottom on the daily chart. If they get it, the odds will favor a new high within a couple of weeks. If they do not, the Emini will likely continue sideways to down to the bull trend line below.
The Emini has been in a tight range for 6 days. That increases the chance of a lot of trading range trading again today. But, since the Emini is at support on the daily chart, it is in breakout mode. Tuesday was a small bull breakout. There is an increased chance of a bull trend day today and a confirmation of Tuesday’s bull trend reversal.
EURUSD Forex market trading strategies
The EURUSD daily Forex chart has been in a trading range for 5 months. Despite the August 28 lower high, it is also in the early stages of a bull trend. Therefore, the odds are that it will break above the 1.1850 top of the range before it falls below the August 15 1.13 bottom of the range. But, there is no sign of an impending breakout, so the range could continue for a month or more.
It had been in a tight triangle for 3 weeks. Traders ave been taking profits after 1 – 3 days and betting on small reversals.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been in a 30 pip range overnight. Day traders are continuing to scalp, betting on reversals instead of breakouts.
Since the past 3 weeks have been in a triangle, the odds of a bear breakout below the 3 week tight range are almost as high as for a breakout above. However, the bear breakout will fail, even if it lasts a few days. The bulls should be able to create a higher low above the August 15 low.
The 5 minute chart had a 40 pip rally over the past 10 minutes. That increases the chance of a bull trend day today.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
The Emini gapped up, but then went sideways. The bulls need strong follow-through buying tomorrow. If they fail to get it, this 4 day rally might reverse down from a lower high. If tomorrow gaps down, today will be a 1 day island top. However, island tops and bottoms are minor reversals.
Tomorrow is Friday and therefore weekly support and resistance are important, especially at the end of the day. This week’s high, low and open are magnets, as are last week’s high and low.
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.