Emini ii final bull flag before pullback
The Emini gapped up on the weekly chart. In addition, it is in a parabolic buy climax on the daily chart. The odds are that the breakout will lead to a trading range this week.
The day began with a trend from the open bull trend. Because the Emini is so overbought on every time frame, it will probably not continue as a strong bull trend day. Hence, the odds are that it will either form a parabolic wedge top and a reversal down, or a 3 – 4 hour trading range. There is no top yet, but the odds of a continued strong bull trend day are about 30%.
Pre-Open Market Analysis
The Emini rallied strongly last week. Thursday and Friday were consecutive inside bars and therefore created an ii breakout mode pattern. After the 2 week strong rally, the odds are that there are buyers below.
Furthermore, Friday was a bull bar. That therefore increases the chances of a successful bull breakout today. Yet, because the rally was extreme, it was climactic. Hence, a bull breakout will probably not last more than a few days before the Emini enters a trading range. Therefore, this week will probably be the start of a trading range.
Overnight Emini Globex trading
The Emini is up 5 points in the Globex market. Yet, even though there is no clear top yet, the daily chart is in a parabolic buy climax. Hence, the odds are that this week will go sideways. This is similar to the November 25 and December 13 buy climaxes rallies. The odds are that there will be sellers above Friday’s high. Therefore, if today gaps up, the gap will probably close today or tomorrow. The chance of a strong rally this week is only about 30%. Sideways is more likely.
EURUSD Forex Market Trading Strategies
The EURUSD 240 minute chart has had repeated swings up and down in tight channels. Yet, it is still in its 4 month trading range. Furthermore, that range is a the bottom of a yearlong trading range.
Major trend reversal attempt this week
Last week’s rally broke far above the bear trend line on the 240 minute chart. In addition, it had many bars completely above the moving average. This is a sign of strong bulls. As a result, the odds are that it will find support around last week’s low. Hence, it will probably try to create a major trend reversal this week. Since the 2 day bear channel is tight, the bulls will probably need to stop the selloff for a day or two before they can create the bottom attempt.
Double top bear flag
The bears see the 2 day selloff as a double top bear flag. But, because the selloff is still above the January 11 major higher low, it is more likely just part of the trading range that began with that low. Since reversals within trading ranges usually come after breaking through support and resistance, the bottom might not come until after a break below that January 11 low.
Head and shoulders bottom
On the daily chart (not shown), the bulls want this month long selloff to rally from above the December low. If so, they would buy the reversal up because that would be an attempt at a higher low major trend reversal. Furthermore, it would be a head and shoulders bottom.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
The Emini gapped up again on the weekly chart. This is therefore consecutive gaps up on the weekly chart. Because that is unusual, it is unsustainable and climactic. Yet, ther is no top yet.
Since the daily chart is in a buy climax and last week ended with an ii pattern, the odds are that the rally will end today or tomorrow. Most climaxes are followed by trading ranges, not reversals. Therefore, the Emini will probably go sideways for the rest of the week.
It is in the cluster of measured move targets. It therefore can turn down at any time. Yet, the bears will probably need at least a micro double top. The odds still favor a test of the December low at some point in the next couple of months. That is therefore about a 5% pullback.
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.