Emini 60 minute head and shoulders bottom for minor summer rally
Pre-Open market analysis
The Emini reversed up yesterday on the 5 minute chart. Today was the 1st breakout above a lower high on the 60 minute chart in a month. It has been forming higher lows over the past week. This is a sign that the bear trend is losing momentum.
If the rally goes above the June 27 major lower high, the bear trend on the 60 minute chart will have evolved into either a trading range or a bull swing. The odds are that this will happen today or tomorrow.
Today is Friday so weekly support and resistance can be important, especially late in the day. The most important price is the high of the week. If the week closes near its high, this week will be a decent buy signal bar for next week on the weekly chart.
Overnight Emini Globex trading
The Emini is up 2 points in the Globex market. But, it is within 10 points of the top of a month-long trading range. It is therefore at resistance and there is an increased chance of a smaller trading range here for a few days. If so, the 5 minute chart will also begin to have more trading range trading.
Whenever the Emini is testing resistance, there is always an increased chance of a big trend day up or down. However, it more likely will get confused and balanced for at least a couple of days 1st.
Yesterday’s 2nd rally had many small, overlapping bars with prominent tails. The rally therefore looks more like a bull leg in a trading range than a bull trend. Consequently, the odds are that today will begin to enter a trading range within the 1st 2 hours.
EURUSD Forex market trading strategies
The EURUSD weekly Forex chart has rallied for 3 weeks from a double bottom and a micro double bottom. The odds are that the rally will continue to the resistance of the 20 week EMA and the June 26 high.
That high is the neck line of the double bottom. The bulls want a strong breakout above and then a 300 pip measured move up. However, the bears will try to form a double top bear flag with the June 26 high. They then want a break below the June 21 low and at least a 300 pip measured move down.
Since there are now 3 consecutive bull bars, the odds are that the weekly chart will continue up for at least another week or two. It should test resistance above. The bears need a bear bar for a sell signal bar. If they get is, they will have a credible Low 2 (micro double top) bear flag at the EMA.
If there are 3 – 5 bull bars before there is a bear bar, the bears will probably need at least a micro double top in addition to the double top before they can get a swing down. The odds favor another 100 pips up to test the resistance above.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has rallied 60 pips overnight. June 14 was a big sell climax day on the daily chart. Its high is therefore a strong magnet above. The 3 week rally will probably continue at least up to that high over the next week or so. Therefore, the bulls will continue to buy selloffs for 30 – 50 pip legs up.
When there are trading ranges on the 5 minute chart, the bears will sell for scalps. Until there is a credible top, the bears will only scalp.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
The Emini had a Small Pullback Bull Trend day today. Since it broke strongly above the 2 week trading range, it triggered the 60 minute head and shoulders bottom buy signal. There will likely be at least some follow-through buying early next week. However, if the bears can prevent a move above the May high, they will create a head and shoulders top on the daily chart.
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.