End of day comments about today’s Emini price action and day trading
Today is a Friday, so weekly support and resistance are important. The most obvious targets were last week’s low, this week’s low, and the July high. The Emini sold off in a bear channel to below the low of the week. After a wedge bear flag at 11:10, the Emini turned up from a lower low major trend reversal. The day closed below the daily moving average and the earlier low of the week.
S&P500 Emini intraday market update for price action day traders
Time of update 7:32 a.m. PST.
The Emini began with trading range price action. It sold off on the open to the daily moving average and the July high, and reversed up from there, as it has done for the 3 prior days. The reversal was strong enough to make the Emini always in long, and the low is a possible low of the day. The rally is strong enough so that the first pullback will probably be bought and it will be followed by a second leg up. However, since most of the price action over the past weeks has been within a trading range, a strong trend up or down is not likely. Also, the Emini sold off 9 points from the open. That is usually too much for the day to become a bull trend day. There are very few bars on the daily chart with tails on the bottom that are 9 points tall.
Since the Emini is at the bottom of the trading range, the bears would need a strong bear breakout to get significantly lower prices. Otherwise, buyers will keep coming in around the bottom. The odds therefore favor a trading range day. A bear trend day is possible. A bull trend day is unlikely because of the 9 point sell off. A trading range day can have legs up or down that cover many points and last several hours, but a trading range day is most likely today.
S&P500 Emini 60 minute, daily, weekly, and monthly candle charts
The 60 minute chart is in a 3 week trading range. When a trading range lasts 20 or more bars, the market is usually also in a bull trend and a bear trend. The bulls see this as a bull flag and are looking for trend resumption up. The bears see the September 5 lower high as a lower high major trend reversal and the start of a bear trend. Until there is a breakout up or down, we will not know which pattern will fail.
Since that September 5 lower high is the cornerstone of the top, the bulls want to breakout above it. If so, the top will have failed. The bulls would then try for a new high and then a measured move up. Because the bears will get out and the bulls will buy more above that high, it is an important price and therefore a magnet. The Emini might get vacuumed up to it over the next few days and then see which side is stronger. The bears will try to create a double top lower high major trend reversal, and the bulls want to break above it.
The FOMC report on Wednesday can be the information that leads to the resolution. Since the monthly chart is so overbought and since the weekly chart is trying to trigger a low 4 short, I think that the odds favor a move down to at least 1900. The weekly chart might then evolve into a trading range. However, because the bull trend has been so strong, there might be a strong bull breakout first. If so, this 3 week long trading range could become the final flag of the bull trend. Traders would then look for TBTL (Ten Bars Two Legs) sideways to down.
But, on what time frame? I have been talking about the major trend reversal on the 60 minute chart, but there is also a top on the weekly chart. I therefore expect the pullback to last at least 10 weeks, which is the highest time frame with a topping pattern. The monthly chart is so bullish that any selloff will probably only be a pullback last a few bars, and not a top. This is consistent with about 10 bars on the weekly chart.
See the weekly update for a discussion of the weekly chart.