Emini failed breakout above January high and 2900
Pre-Open market analysis
Yesterday gapped up to another all-time high, but sold off back into Monday’s tight trading range. Since it was a bear bar on the daily chart, it is a sell signal bar for today. The bears want a failed breakout above the January high.
Their 1st goal is to get back below the 2884 January high. A more important goal is to close the gap above Friday’s high. The bulls always want the opposite and they will buy just above that 2877.25 high. The Emini will probably test one or both of these support levels this week. It will then decide between trend resumption up or trend reversal down. Up is more likely.
The 3 week bull channel on the daily chart is tight. The bears therefore will probably need at least a micro double top before they can get a swing down. But, the 1st reversal down will probably only last 1 – 2 days.
Overnight Emini Globex trading
The Emini is down 1 point in the Globex session. After Monday’s gap up to a new all-time high, the odds favor 2 – 4 trading range days. Since yesterday was a trading range day, today will likely be another. However, because the Emini is at a major prior high, there is an increased chance of a big trend day up or down.
EURUSD Forex parabolic wedge buy climax at resistance
The EURUSD daily Forex chart had a 3 legged rally in a tight bull channel. This is a parabolic wedge buy climax. Two small legs sideways to down over the next week are likely.
The rally came from a parabolic wedge sell climax. Trend reversals usually have a transition when there are elements of both a bull and bear trend. For example, the 1st leg up in the August 15 parabolic wedge bottom began before the final low. This is common.
The rally is strong enough to have one more leg up before there is exhaustion. But, it has met the minimum goal. In addition, it is just below the July 31 major lower high and at the 20 week EMA resistance. Furthermore, the daily chart has been oscillating around 1.17 for 4 months, so that is also resistance.
The daily chart has probably entered a trading range, especially since it is back in the middle of a 4 month range. While there might be another minor high this week, the chart will probably be sideways for at least a week or two. Traders will sell rallies, buy selloffs, and take quick profits.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart sold off 70 pips overnight. I said yesterday that the trading range would probably be about 150 pips tall. Obvious support is the 20 day EMA, the August 23 low just above 1.15, and he June 21 low.
When the daily chart enters a trading range, the lower time frame charts begin to have smaller bars and lots of small trading ranges. Day Traders will be quick to take profits. However, there will be 30 – 50 pip day trades from minor support and resistance on the daily and 60 minute charts.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
The Emini rallied strongly to a new all-time high. However, the 2 day trading range on the 60 minute chart is a possible Final Bull Flag. In addition, this rally is extreme and therefore climactic. This increases the odds of a 1 – 2 day pullback soon. However, the bull trend is intact and higher prices are likely.
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.