Emini stock market parabolic buy climax near 2350 resistance
The Emini began with small sideways bars. Hence, it tetsed yesterday’s high. The odds are that there will be at least 2 hours of sideways to down trading. Furthermore, there is better than a 50% chance that today will have a bear body after 6 strong bull days. Hence, the odds are that today will be a trading range day or a bear trend day. There is probably only a 20% chance of a bull trend day.
At the moment, the bears are trying for an early selloff. If they get 2 or 3 strong bear bars, that would probably be the start of a swing down.
Pre-Open Market Analysis
Yesterday was the 6th consecutive strong bull trend day on the daily chart. Because that is unusual, it is unsustainable. It is therefore a buy climax. Since bulls have been buying at the market, they will be happy to buy a pullback. Hence, the 1st reversal down will probably last only a day or two.
Since this is a buy climax, the Emini will probably pull back today or tomorrow. Because the rally has been so strong, the selloff will probably not be more than 20 points. In addition, it will probably not last more than a couple of days.
Because the Emini is now in the 2340 – 2375 measured move target area, it can pull back deeply at any time. Since any reversal will usually need at least a micro double top, the odds are against a significant pullback for at least a few days.
Emini Globex trading
The Emini is down 5 points in the Globex session. Because yesterday was a buy climax, there is a 50% chance of follow-through buying in the 1st 2 hours. In addition, there is a 75% chance of at least 2 hours of sideways to down trading that starts by the end of the 2nd hour. Finally, the Emini has had 6 consecutive bull days closing on their high. Because that is unusual, it is unsustainable and climactic. As a result, the odds are against a bull trend day today.
Since it is also a sign of strong bulls, bulls will buy the 1st pullback. Hence, although the Emini will probably pull back 10 – 20 points this week, the best the bears will probably get is a trading range. Since a trading range is likely after a strong buy climax, that is what is likely for today and tomorrow.
EURUSD Forex Market Trading Strategies
I have said for the past few days that the EURUSD would probably rally 100 – 150 pips. This is because the selloff on the 240 minute chart was climactic, and the odds favored a reversal up. Furthermore, the middle of the 2 month trading range was resistance, and that was about 150 pips above yesterday’s low. In addition, the top of the wedge is the February 8 lower high of 1.0714. That is also a magnet.
Since the 2 day rally has been strong and wedge bottoms usually have 2 legs sideways to up, bulls will probably buy the 1st selloff. It will therefore probably create a higher low major trend reversal. Because of the 2 month trading range, the reversal will more likely lead to just another leg in the trading range and not a bull trend.
Overnight Forex trading
Yesterday’s rally continued overnight. But, now the EURUSD is testing resistance. Therefore the odds are that it will pull back within a few days. Since a 2nd leg sideways to up is likely the bulls will probably buy the selloff.
The bottom of the selloff will be around the middle of the current rally. The 60 minute chart has a spike and channel bull trend. In addition, the 1st pullback was around 1.0580. Furthermore, that is around a 50% pullback and around the February 14 sell climax low. Therefore, that is a logical area for bulls to buy after a selloff.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
While the Emini sold off today, this was the 1st pullback after 6 strong bull days. Therefore the bulls will probably buy tomorrow for a test of yesterday’s all-time high. Although the 6 day rally was a buy climax, the odds are bulls will buy this 1st pullback within a day or two.
Because today was an inside day, it is a buy signal bar on the daily chart for tomorrow. Yet, it was a doji day in a 6 bar buy climax. Therefore the rally will probably enter a trading range within a couple of days.
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.