Emini bull leg in developing trading range after 10% correction
The Emini tested the 60 minute moving average and the open of the week on the open. The bulls are trying for an Opening Reversal up from this support and an early low of the day. The odds are that the Emini will close the week above the open. This would create a bull bar on the weekly chart.
Since a trading range is likely, traders should expect lots of reversals and swings up and down. The bars are big and therefore traders should only trade if their accounts are big enough to use the correct stops.
At the moment, the Emini is Always In Long and trying to get up to yesterday’s close. However, the bulls need consecutive big bull bar. Otherwise, this will be a trading range open.
The bears want a break below yesterday’s low. But, the opening micro double bottom at support make an early rally more likely.
Pre-Open market analysis
The Emini broke above Friday’s high yesterday and therefore triggered a High 2 buy signal on the daily chart. Since yesterday was not a big bull trend bar, it was not a strong entry bar. However, the High 2 had 2 strong reversals up over the past week. The odds favor a weak rally this week to last Wednesday’s high.
The monthly chart is in a strong bull trend. Consequently, the odds are against much more down on the daily chart. Most likely, it will go sideways for 1 – 3 months. Then, the bulls will try to form a major trend reversal.
Less likely, the bears will break strongly below last week’s low and get a 20% correction. Even if they succeed, the selloff will still favor a bull flag on the monthly chart.
Overnight Emini Globex trading
The Emini is down 10 points in the Globex session. The odds are that it will retrace about half of the February selloff before trying to break below last week’s low. However, the rally will likely form a lower high. The odds are that it will be a bull leg in a 1 – 3 month trading range. Consequently, it will probably be weak.
This means that it will probably lack consecutive big bull bars. Moreover, it will have pullbacks. For example, although yesterday was an entry bar for the bulls, it is a Low 1 sell signal bar for the bears. Given how strong the selloff has been, today could trigger the sell signal by trading below yesterday’s low. Yet, the odds are that Friday was a short-term bottom. Therefore, there probably are more buyers than sellers below yesterday’s low.
Traders should expect that the rally over the next week or two will have pullbacks. These attempts to resume the bear trend will probably fail. The probability is that the Emini will work higher for a couple of weeks. Therefore, when there is a 2 – 3 hour selloff, day traders will look to buy a reversal up.
The bears expect selloffs. They therefore will look to sell any 2 – 3 hour rally for a leg down. There will probably be one or more bull and bear trend days in the next 2 weeks as well. Yet, the Emini is most likely in a 2 week bull leg in 1 – 3 month trading range.
EURUSD weak rally to a lower high
The EURUSD daily Forex chart had a wedge rally to 1.2500 in January. It is also forming a wedge bear flag on the monthly chart. After selling off for 6 days, it has rallied for 3 days. The bulls hope this is a double bottom higher low with the January 18 major higher low. They then want a breakout above the January high. That is the neckline for the double bottom, and they hope for a measured move up from there. That is a low probability bet at the moment.
The selloff was weak, and the rally so far is weak. Both lacked consecutive big trend bars. The daily chart has been in a trading range since January 16. Both last week’s selloff and this week’s rally look like legs in a trading range.
After a wedge top, especially after a tight bear channel down from resistance, the odds favor a 2nd leg sideways to down. That is why I have been saying for the past few days that a 150 – 200 pip rally was likely. It should retrace at least 50% of the selloff and reach to around 1.2400. That is only another 50 pips higher. The rally will probably last a few more days and then fail. The 2nd leg down will probably fall below the January 18 low, which is around 1.2200.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has rallied 150 pips from last week’s low. Yet, it has only been up about 50 pips overnight, and it has retraced half of the rally. The rally is a bull leg in a trading range on the daily chart. It is now in the sell zone.
However, it should get closer to 1.2400 and a 50% retracement of the 2 week selloff before failing. Consequently, the bulls can still swing trade for another 50 – 70 pips. Since the legs on the 5 minute chart are small, day traders are mostly scalping. The bears will begin to swing trade later this week once the rally is around 1.2400.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Today was a bull trending trading range day in a bull leg in a developing trading range. The odds are that there will be buyers below today’s low, and the Emini will work higher for 1 – 2 weeks.
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.