As I write, the Emini is always in long and in a bull channel, but it is still below yesterday’s high. The bulls need a breakout soon, or the market will reverse and test yesterday’s low. Also, they need follow-through after that breakout if today will become a bull trend day. Otherwise, the trading range will continue.
Yesterday was a big trading range day and an outside day on the daily chart. Today opened within that range and traders thought that the initial rally could be setting up an opening reversal down from just below yesterday’s high, thinking that today could be an inside day. This would create an ioi pattern on the daily chart.
There was also an opening reversal up from the moving average. This created a tight trading range and a breakout mode opening range. Traders are looking for a breakout up or down. The probability of a profitable trade on the breakout is about 50%. Traders wanting a higher probability will wait to see if the breakout is strong.
Last week had a small range, as does this week. This is trading range behavior. Today opened within yesterday’s tight trading range, and yesterday had several big reversals. The odds are that today will be a trading range day and it will test weekly support and resistance. The high, low, and close of last week are all within about 10 points. The Emini might test all of those today. However, because these 2 weeks had small ranges, the Emini could break out either way and have a big trend day. This is less likely than the trading range price action continuing because most breakout attempts of trading ranges fail.
Until there is a strong breakout with follow-through, traders will be quick to take profits. They are extra cautious after yesterday’s big reversals, and they know that today might be another trading range day.
Day trading outlook for tomorrow’s Emini price action
Please see this weekend’s report.
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.