Emini bull channel but double top bear flag with March high
Pre-Open market analysis
The Emini could not sustain a weak bull reversal day yesterday. It was the 5th consecutive small trading range day. Traders want to know if there will be a breakout far above the March high or a reversal down. There is no sign of either yet. Day traders will continue to mostly scalp until there is a series of strong bull trend bars up or down on the 5 minute chart. However, a month-long swing up or down will probably begin within the next 2 weeks.
Overnight Emini Globex trading
The Emini is down 5 points in the Globex market. Today therefore might gap down. Traders are deciding if yesterday’s pullback will lead to one more leg up to the March high this week or continue down to the July 11 pullback low. Because the past 5 days have been mostly sideways on the 5 minute chart, that is likely again today. But, since the daily chart is at important resistance, a strong trend up or down can begin at any time.
EURUSD Forex market trading strategies
The EURUSD daily Forex chart has been in a trading range for 2 months. It is therefore in Breakout Mode. Traders expect a 300 pip measured move up or down. But, the parabolic wedge sell climaxes in May were exceptionally strong. In addition, they stopped at support on the weekly chart. Finally, there was another extreme sell climax on June 14. These factors make a test of the June 14 high more likely than a breakout below the June 21 low.
However, even if the daily chart gets a 50% pullback to around 1.20, the bear trend is so strong that the rally will probably be a pullback in a bear trend and not a new bull trend. Consequently, the odds favor a break below the June 21 low after any rally over the next couple of months.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart rallied above yesterday’s high, but reversed back down. Since the 50 pip selloff is in a tight bear channel, the odds are against a strong rally today. Because the selloff is now back to the apex of the 2 month triangle, it will probably not continue much lower today. Therefore, today will probably begin to go sideways and day traders will scalp. The bottom of the range will likely be around where the market now is and yesterday’s low. That is about 25 pips lower.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
The Emini finally broke above the March major lower high. As strong as the rally was, it could not get far above that resistance. It closed only 1 tick above.
The bulls need follow-through buying over the next several days to convince traders that the breakout will be successful.
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.