Emini outside up day and micro double bottom
Pre-Open market analysis
The Emini had a big outside up day yesterday. It formed a micro double bottom with Friday’s low, and it is therefore a buy signal bar for today.
However, the 2 week selloff did not reach the bottom of the bull channel or last week’s low. Both remain magnets below. Unless the bulls get strong follow-through buying today or tomorrow, the odds favor sideways to down to the bull trend line. It is currently just below yesterday’s low.
If yesterday is the end of the 2 week selloff, the bulls will begin to create a series of bull trend days. Day traders should therefore be ready to swing trade if today begins to trend.
Can today reverse down? Yes. Remember, there are magnets below yesterday’s low. Also, yesterday’s high stopped at a 50% pullback from the 2 week selloff. As big a bull day as yesterday was, without follow-through today, it is just a bull bar in a 4 day tight trading range.
Overnight Emini Globex trading
The Emini is down 1 point in the Globex session. If it opens here, it will be in yesterday’s 4 hour tight trading range. The bulls want trend resumption up, which is slightly more likely than a trend reversal down.
However, the Emini would not be going sideways if the bulls had a significant advantage. The bulls and bears are balanced, and day traders need to be prepared for a breakout up or down. Support below is at the 60 minute 20 bar EMA and the January high. Resistance is at yesterday’s high, which was a 50% retracement of the 2 week selloff.
EURUSD Forex triangle bull flag in 5 month trading range
The EURUSD daily Forex chart had a lower high on August 28. The bears hope that the 3 week selloff is a resumption of the 8 month bear trend. However, the reversal up from the August 15 low was strong. In addition, the 8 month bear trend is probably just a bull flag on the weekly chart. Therefore, the daily chart is likely in the early stage of a bull trend that will last many months.
Since the daily chart is now back in its 5 month trading range, it could stall here for a couple of months. In addition, it might break again below the June 21 low. But, the odds are that the August 15 low will hold and the rally will break above the 1.1850 top of the range before the bears break below the August 15 low.
Overnight EURUSD Forex trading
The EURUSD 5 minute chart has been in a 35 pip range overnight. That range is in the middle of a 3 week triangle and a 5 month trading range. Day traders will only scalp unless there is a strong breakout up or down. Since the daily chart is reversing every couple of days, the bulls will look to buy below yesterday’s low.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
The Emini formed a trading range today. There was no follow-through buying after yesterday’s rally. This is because many bulls do not want to buy until there is a reversal up from the daily trend line, which is around yesterday’s low. Alternatively, they will buy higher if there is a strong rally tomorrow. The odds favor sideways to down to the bull trend line.
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.