Emini possible outside down week in 4 month trading range
Pre-Open market analysis
While the Emini gapped down yesterday, it reversed up and did not trade below last week’s low. The rally from the May 3 low was strong enough so that there is a 60% chance that the Emini will make a new all-time high before falling below the February low.
Yesterday is a buy signal bar on the daily chart. Since it is a big bar, the risk is greater and the probability of a big bull trend today is less. However, after the strong reversal up yesterday, today will probably not be a bear trend day.
Overnight Emini Globex trading
Yesterday’s rally was a wedge. Today is therefore likely to have a pullback that has 2 legs. It might test the 2721 beginning of the wedge bull channel. A wedge typically transitions into a trading range.
The Emini is currently down 4 points in the Globex market. The odds are that it will form a trading range in the 1st 2 hours. Less likely, the bulls will get a strong break above the wedge top or the bears will reverse far below the 2721 bottom of the wedge. Since every day for the past 2 weeks has been mostly sideways, that is what is likely again today.
EURUSD Forex market had exhaustive sell climax yesterday
The EURUSD daily Forex chart has fallen in a series of sell climaxes over the past month. The bars are starting to form tails at their bottoms. Furthermore, the bulls have been making money buying at and below prior lows over the past 2 weeks. These are early signs of a sell climax transitioning into a trading range.
While the selloff might continue down to the November 7 low before having its 1st 2 week rally, that rally can come at any time. Therefore, the bears will switch to selling rallies and taking profits at new lows. In addition, the bulls will begin buying below recent bars and holding for 50 – 100 pip bounces.
Since the bear channel is tight, the 1st rally will be minor. Yet, it will probably last about 10 bars and have at least 2 legs. In addition, it will probably get close to the 20 day EMA. This means that it will be at least 150 pips tall.
After that 1st strong minor reversal, the bears will return. While they might get a test down to around 1.1500 and the November 7 low, there is a 60% chance that the daily chart will be in a 300 pip tall trading range for the next 2 months.
Overnight EURUSD Forex trading
Yesterday’s bear trend was big and it was late in a bear trend on the daily chart. It is therefore likely exhaustive. Exhaustion usually leads to a at least a small trading range. Therefore, today will probably be a trading range day.
The 5 minute chart has been in a 50 pip tall range overnight. The downside risk is small today, and the bulls will buy below prior lows. While today could be a big bull trend day, it is already a bull trend. It will probably not get much bigger. Day traders will therefore be scalping today.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
The Emini sold off strongly on the open in a series of sell climaxes. That made a reversal up likely. After a wedge bottom, the Emini rallied and formed a bull reversal day.
It is still in its 8 day tight trading range. But, it is still more likely to make a new all-time high than fall below the February low.
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.