S&P500 Emini intraday market update for price action day traders
The Emini gapped up and broke above the top of the 60 minute channel, but reversed down slightly. This is a failed breakout above the bull channel. There was only one bull candle in the first 11 bars. Although the selloff is weak, it is enough selling pressure to make the odds of a bear channel good. Unless the bulls reverse this up strongly, bears will sell pullbacks and above bars looking for a trend down. The bulls need to get above a lower high to convert this early bear channel into a trading range or a bull trend.
A big gap up above resistance can lead to a trend day up or down. Traders will watch for consecutive strong bull or bear trend bars. If the day begins to trend, traders will swing in the direction of the trend. About 2 out of 3 breakouts above bull channels fail and reverse sideways to down to at least the bottom of the channel.
There are weekly magnets above, around 2,030, and the Emini might try to reach them before any pullback on the daily chart. The odds are that it will pull back on the daily chart before getting there.
S&P500 Emini 60 minute, daily, weekly, and monthly candle charts
Today is Friday so its close affects the weekly candle chart. The high of last week was 1998.25 and the high of the week before was 2002.00. The bulls want a gap on the weekly chart. They want this weeks close to be above one or both of those prior highs. The Emini bulls will then hope that the gap becomes a measuring gap.
The bears want the Emini to close below both, preventing the gap from forming. If the bulls succeed in creating the gap, the bears will then want it to close next week and become an exhaustion gap. This would require next week to trade down below both of those weekly highs. If so, it would be a sign of strength for the bears. Although the odds favor a weakening channel on the weekly chart, it is still in a strong bull trend. One sign of weakness would be if selling comes in above the September 4 high. When traders begin to sell new highs, the market usually tries to evolve into a trading range. There is no sign of this yet.
As the Emini rallies closer to the tops of channels, it will be more drawn by their magnetism. The closer the Emini gets, the more likely it will get vacuumed up to them. There is a daily and a 60 minute channel top just above 2010. This is close to leg 1 = leg 2 measured move targets based on the rally that began on Tuesday. The weekly channel top is around 2035, and this is also a measured move projection from the August 18 gap.
See the weekly update for a discussion of the weekly chart.