Emini High 1 bull flag but at triple top
I will update again at the end of the day.
Pre-Open market analysis
Today is the final day of the month. On the monthly chart, February will probably be a bull trend bar closing near its high.
On the daily chart, every pullback for the past 2 months lasted only 1 – 2 days. Yesterday was the 2nd day of a pullback. It is therefore a High 1 bull flag and a buy signal bar for today.
However, Monday was a strong sell signal bar. In addition, the daily chart is in a parabolic wedge buy climax at resistance. There is a triple top just above 2800 and Monday reversed down from above the 3rd top.
Because the buy climax on the weekly chart is so unusually extreme, the bulls will probably begin to take profits for 2 – 3 weeks. That profit-taking may have started on Monday. Therefore, while yesterday is a buy signal bar, there might be more sellers than buyers above its high and above Monday’s high.
The bulls want a 10th consecutive bull bar on the weekly chart. Monday’s selloff never came back to test the open of week at 2808.00. Consequently, the bulls will try to test it today or tomorrow.
Overnight Emini Globex trading
The Emini is down 4 points in the Globex session. Yesterday was a good buy signal bar in a bull trend on the daily chart. The Emini today will probably have to go above yesterday’s high to trigger the buy signal. Traders want to know if the bulls will be willing to buy in a buy climax at the top of the 4 month range.
Also, the bears want to see if they can turn the bulls back down a 2nd time. If they can, that would create a micro double top and increase the likelihood of a 2 -3 week pullback.
Yesterday’s high is an important magnet. And so is the open of the week at 2808.00. Therefore, the odds favor a test of 2808.00 today or tomorrow. The bulls will therefore buy pullbacks.
Because the bears expect a test of 2808.00 as well, there is not a strong reason to sell below there. But, they probably will sell there to make the week have a bear body when the week closes tomorrow.
Can today be a huge bull day that breaks far above Monday’s high? Or, can today reverse down to far below yesterday’s low? Neither is likely. The odds favor a test of 2808 today or tomorrow. Most of the trading for more than a week has been predominantly sideways. That is likely again today.
EURUSD wedge rally to middle of 4 month trading range
The EURUSD daily Forex chart rallied back to the middle of its 4 month range. The rally has had 3 to 4 pushes up and is therefore a wedge. A wedge rally is a buy climax. Buy climaxes typically result in exhausted bulls. They usually lead to a pause. Consequently, the odds favor a few sideways days. This is especially true since trading range markets spend most of their time in the middle third of the range.
The bulls want today to close on its high and far above yesterday’s high. They then want tomorrow to also be a bull day. If they get that, today’s breakout above the wedge bear flag will probably continue up to the top of the 4 month range.
More likely, the rally will stall today or tomorrow and the chart will go sideways for several days. Look back over the past 4 months. Most of the trading was between 1.13 and 1.15. This is where the market currently is.
Trading ranges always have strong legs up and down. But, reversals are more likely than successful breakouts. I said this during the early February collapse, even though the selloff was strong. I also said that at the January high. Nothing has changed. There is no breakout until there is a breakout. Until then, traders correctly expect reversal every 2 – 3 weeks.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart rallied 50 pips overnight. However, it pulled back 30 pips over the past hour. The bulls want a close today far above yesterday’s high, but that is unlikely.
Yesterday had a bear body on the daily chart. The rally is in a wedge bull channel. And, the market is back to the middle of its 4 month range. Consequently, there will be probably more sellers than buys above yesterday’s high. Day traders will look to sell rallies to around yesterday’s high.
Since the 3 week rally has been strong, a big bear day is unlikely. Consequently, the bulls will buy a 30 – 50 pip pullback. The result will probably be a trading range day.
Furthermore, the 5 minute chart will probably enter a trading range between 1.13 and 1.14 for a few days. That is because there was a pause for 3 days last week around 1.13, and channels typically evolve into trading ranges.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
Today was the last day of the month, and February closed near its high. The weekly chart is more important. The bulls have a streak of 9 consecutive bull bars on the weekly chart. I only found one longer streak in the 20+ year history of the Emini. Consequently, the odds favor a close below 2808.00 tomorrow. However, it is a magnet, and the bulls will try to test it tomorrow. It is probably too far above for the bulls to get there tomorrow.
Monday’s bear reversal is probably the start of a 2 – 3 week pullback. This is true even if next week goes slightly above this week’s high.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
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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.