Emini endless pullback from parabolic wedge buy climax
I will update again at the end of the day.
Pre-Open market analysis
As I said before yesterday’s open, there is a parabolic wedge buy climax on the daily chart. It most often leads to an Endless Pullback. This is a small bull flag that keeps adding bars, but the bull trend does not resume. That is what is likely here over the next 2 weeks. It is typically just a tight trading range that tilts down.
If the bulls do get one more new high this week, traders will probably sell it. Despite the strong rally over the past 4 weeks, the bulls are now exhausted. Risk managers will insist on traders reducing their longs. The result is usually a 2 week pullback.
Can the bears get a strong reversal down? Yes, but when a bull trend has been as strong as the current one, the 1st leg down is typically either brief or shallow. Traders should expect sideways to down price action for a couple weeks.
Overnight Emini Globex trading
The Emini is up 10 points in the Globex session. This is a continuation of yesterday’s bull breakout above the bear channel. However, because of the buy climax, the odds are that the Emini will be mostly sideways to down for a couple weeks.
When that is the case, there is typically a lot of trading range price action intraday. There are usually more limit order entries and fewer stop order entries. However, the legs up and down are big enough for swing trades, and there still will be many good stop order trades every day.
EURUSD Forex chart waiting for Brexit catalyst before breaking out
The EURUSD daily Forex chart sold off for 3 weeks after breaking above the 3 month trading range. There are higher lows and highs since November, which is a 3 month bull channel. However, it is within a yearlong bear channel. Finally, it is in the middle of a 3 month trading range. The chart is in Breakout Mode.
Over the past 7 days, the bars have become small. In addition, there is a lot of overlap. Finally, there is a 6 day micro wedge bottom. These are signs that the selloff is losing momentum and awaiting information. Brexit is a potential major catalyst for a successful breakout up or down from the 3 month trading range.
Overnight EURUSD Forex trading
Because the past 6 days have been trading range days, today will likely be mostly sideways again. The EURUSD 5 minute chart has been in a 25 pip range overnight. Day traders will continue to scalp, waiting for a strong breakout up or down. Since there is no bottom yet, the odds are that the selloff will reach the January 3 low around 1.13 within 2 weeks.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
The Emini sold off strongly from just below yesterday’s high. It reversed up from below yesterday’s low closed in the middle of the range. This is consistent with a sideways to down move after the parabolic wedge rally on the daily chart. There will probably be many mostly sideways days over the next 2 weeks after the exhaustive buy climax.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
Traders can see the end of the day bar-by-bar price action report by signing up for free at BrooksPriceAction.com. I talk about the detailed S&P Emini futures price action real-time throughout the day in the BrooksPriceAction.com trading room. We offer a 2 day free trial.
Charts use Pacific Standard Time
When I mention time, it is USA Pacific Standard Time (the Emini day session opens at 6:30 am PST, and closes at 1:15 pm PST). You can read background information on the intraday market reports on the Intraday Market Update page.