Today began with a failed breakout and major trend reversal. Yesterday was a small trading range day, and during a holiday week, trading range price action often dominates. Today broke above the all-time high and reversed down, forming a higher high major trend reversal on the open. It is also a final flag reversal of the breakout above yesterday’s trading range. This could be a trend from the open bear trend day, but the bears need consecutive strong bear trend bars. The initial sell-off lacked consecutive big bear trend bars closing on their lows.
As I write, the Emini is always in short, but the selling is not yet strong and the Emini might get stuck within yesterday’s trading range. This looks more like a bear leg in what will become a trading range. The bulls need a strong reversal up. Until then, traders will only scalp longs, and they will scalp or swing trade shorts.
Day trading outlook for tomorrow’s Emini price action
The Emini reversed down on the open, but the selloff lacked consecutive big bear bars closing on their lows. This made the selloff more likely a bear leg in a trading range rather than a bear trend. It reversed up from below yesterday’s low and became always in long once there was a strong follow-through bull bar. It remained long for the rest of the day, although it had a failed breakout above the top of the bear channel. The big bull trend bar was a 2nd leg trap, which is common in trading range days. It went sideways into the end of the day and could not fall below the bottom of the 2nd bull leg, which began at 9:35 a.m., PST.
Tomorrow will probably have very light trading, as will Friday, which closes early. Although there might be a swing up or down, most of the trading will probably be within a small trading range. There is always a chance of a big breakout up or down out of a very quiet, tight trading range, and the breakout can lead to a big swing that has big volume, but this is a low probability event.
Premarket price action analysis
See yesterday’s intraday market update report for today’s premarket analysis. Once there, scroll down to the heading, Day trading outlook for tomorrow’s Emini price action.
See the weekly update for a discussion of the weekly chart and for what to expect going into next week.