Emini outside down week in 10 week bull micro channel
I will update again at the end of the day.
Pre-Open market analysis
Yesterday traded above Friday’s high and above last week’s high. It sold off below Friday’s low and last week’s low. Therefore, yesterday was an outside down bar on the daily chart. In addition, this week is an outside down bar on the weekly chart.
The rest of the week will be a fight over where the week will close. The bulls want it to close back above last week’s high and the bears want it to close below last week’s low. It will most likely do neither, and it will probably close in the lower half of the week’s range.
1st pullback in 10 weeks
By going below last week’s low, the Emini had its 1st pullback on the weekly chart in 10 weeks. The bulls have been so eager to buy that they have not waited for a pullback. They now have a chance to buy a pullback. Many will take it. As a result, there is a 30% chance that this week will go back above last week’s high and become an outside up week.
More likely, the Emini will pull back for at least another week. A first target is the 20 day EMA. The bears want at least 2 legs down on the daily chart. Yesterday was a Bear Surprise Bar on the daily chart. It therefore will probably lead to at least a couple legs sideways to down. However, after a Bear Surprise Bar, there is often about a 5 bar tight trading range before the 2nd leg down begins. Therefore, the Emini might be mostly sideways over the next week.
The bears want a big selloff today. After yesterday’s big rally, that is unlikely. The bulls want today to be a bull bar on the daily chart. It would then be a buy signal bar for Wednesday. They then want the week to go back above last week’s high. The odds favor more sideways to down instead.
One possibility for today is a bull inside bar, which often follows a bear outside bar. The rally at the end of yesterday was enough to confuse traders. Most likely, the Emini will be sideways for at least a day or two.
2 month pullback after one more new high
I mentioned yesterday that the pullback could last a couple of months since the buy climax is so extreme. There almost certainly will be at least a couple months of sideways to down trading that starts within the next few months.
However, the momentum up over the past 2 months was strong enough to make the 1st reversal down likely to be minor. Therefore, the bulls will probably get one more new high after a 2 – 3 week pullback. Then, the 2 -3 month pullback will begin.
Overnight Emini Globex trading
The Emini is up 4 points in the Globex session. The bulls hope that yesterday’s late rally will lead to a new high. However, it is more likely that it was the start of a 2 – 3 week pullback. Consequently, the late rally will probably be a bear flag.
The resistance of 2800 has been strong for over a year. This rally will likely stall today or tomorrow around that target.
Yesterday’s big bear breakout on the 60 minute chart is a good candidate for a spike down in a Spike And Channel Bear Trend. The channel typically has at least 3 pushes. Yesterday’s selloff was the 1st. Traders should expect at least 2 more legs down on the 60 minute chart over the next couple of weeks.
EURUSD Forex market trading strategies
The EURUSD daily Forex chart sold off from a wedge bear flag over the past 4 days. There will typically be at least a small 2nd leg down from a wedge. Therefore, traders will sell the 1st 1 – 3 day bounce.
However, the market is near the bottom of its 4 month range so traders expect a reversal up after the 2nd leg down. This would be a higher low major trend reversal setup. But, because the legs in the 4 month range have lasted only 2 – 3 weeks, the best the bulls will probably get is a rally toward the top of the range.
Since the range has lasted much longer than all prior ranges over the past couple of years, it will probably break out on some Brexit news within a month. In the meantime, traders will continue to bet on reversals.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been in a 25 pip range overnight. This is so tight that it is difficult even for scalper’s to make money.
It is in the buy zone that I mentioned yesterday. That is around the February 22 low and the 1.13 Big Round Number.
A wedge usually has at least a small 2nd leg down. Today tested yesterday’s low. That meets the minimum requirement. It then typically evolves into a trading range. It has been doing that over the past 2 weeks.
The 3 week bull channel was strong on the daily chart. Therefore, there will probably be a bounce beginning this week to test last week’s high. However, there might be more of a pullback to below 1.13 first.
The chart is in a 4 week trading range at the bottom of a 4 month trading range. Most days on the 5 minute chart will continue to be trading range days within these bigger trading ranges on the daily chart.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
As was likely, today was a trading range day within yesterday’s range. The daily chart now has an ioi breakout mode pattern. Because the daily chart is at resistance and in a buy climax, the odds are that yesterday is the start of a 2 – 3 week pullback. Therefore, there will probably be more sellers above yesterday’s high and last week’s high.
Since today was a doji inside bar, it is not a strong buy or sell signal bar for tomorrow. Therefore, tomorrow might be another sideways day.
The market might be waiting for Friday. The close of this week is important. If the week closes below last week’s low, it would increase the chance of lower prices next week.
If it closes back above last week’s high, the Emini will probably go at least slightly higher before pulling back for 2 – 3 weeks.
Most likely, the week will disappoint both the bulls and the bears and close in the middle.
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.