The day began with a continuation of yesterday’s broad bull channel. The odds are that it will evolve into a trading range. Less likely, it will have a bull breakout and become a strong bull trend. The bears need a second entry short or a strong bear breakout. As I write, the Emini is in a small pullback from the breakout above the big double top from yesterday. The bears see this as a failed breakout and a possible high of the day. If there is one more high today, a reversal down could be in the form of a wedge top. It is always higher probability to wait for the strong bear breakout before shorting, looking for a test of the weekly support around yesterday’s low. A test down is probably what will happen today, but traders have to be open to the possibility of a bull trend.
Here are my thoughts during the first few minutes. Yesterday ended with a big double top major trend reversal. The bears want to get to the weekly support below. If they break below it, that would be a breakout below the neckline of the double top and it could lead to a measured move down. The bulls want a breakout above the double top and then a measured move up to a new all-time high. If they break above, the bears would try to make the breakout fail. A failed breakout above a double top is 3 pushes up and a type of wedge top.
Yesterday also ended with a tight trading range, and today began with trading range price action. Day traders are waiting for a breakout up or down with follow-through before they will be willing to swing trade, Until then, they will scalp, and many will use limit orders and scale into their scalps.
Day trading outlook for tomorrow’s Emini price action
Premarket price action analysis
See yesterday’s intraday market update report for today’s premarket analysis. Once there, scroll down to the heading, Day trading outlook for tomorrow’s Emini price action.
See the weekly update for a discussion of the weekly chart and for what to expect going into next week.