Emini weekly sell signal but at 20 day EMA
I will update again at the end of the day.
Pre-Open market analysis
Yesterday traded below last week’s low and triggered a weekly sell signal. However, the day was a trading range day. Since it closed above its midpoint, it is a buy signal bar for today. The bulls are hoping that the 2 day selloff was simply a pullback to the 20 day EMA.
But, they have to undo the weekly sell signal. They probably need a couple daily closes above last week’s high to convince traders that the 3 month rally is resuming.
Friday’s selloff was exceptionally strong. In addition, the weekly sell signal is the 2nd one in 4 weeks. Furthermore, it is at the 2825 major resistance of the past 16 months. Consequently, the odds favor a 2nd leg sideways to down. This is true even if the Emini rallies for 2 – 3 days.
Overnight Emini Globex trading
The Emini is up 12 points in the Globex session. It may have a small gap up open. Small gaps typically close in the 1st hour.
Yesterday was a buy signal bar on the daily chart. The bulls see the 2 day selloff as a pullback to the 20 day EMA. However, yesterday had a big tail on top and it followed a big bear day on Friday. There might be more sellers than buyers above yesterday’s high. Therefore, day traders will watch for a reversal down at some point today.
Because yesterday formed a double bottom, the bulls want a 25 point measured move up. That would be about a 50% retracement of last week’s selloff. Since the selloff came after a nested buy climax on the daily chart, the odds favor a 2nd leg down. Therefore, even if the bulls get a rally, it will probably reversed down within a few days and form a lower high on the daily chart.
Yesterday was a trading range day and the daily chart has a Big Up, Big Down pattern. Both increase the chance of another trading range today. At a minimum, there will probably be at least one reversal leading to a 2 – 3 hour swing in the opposite direction.
EURUSD Forex market trading strategies
The EURUSD daily Forex chart has an inside day yesterday. So far, today is a 2nd consecutive inside day. If it remains that way, there will be consecutive inside days, which is an ii Breakout Mode pattern.
Last week’s 2 big bear days formed the 1st pullback in 10 days. The bulls typically buy that. Consequently, the odds favor a test up within 2 weeks. At that point, the bears might form a double top with last week’s high. This would give them a better chance of breaking below the March low.
The bulls want this selloff to be a successful test of the March low. They want a rally to begin soon, which they will see as a higher low major trend reversal.
The bears always want the opposite. They are hoping that the weekly chart will continue to make lower highs and lows. In addition, they want a strong break below the March low, hoping that it will lead to an acceleration down.
At the moment, the daily chart is neutral. When that is the case, there is a 50% chance that the 1st move up or down from the 2 day selloff will reverse. Furthermore, there is a 50% chance of a bull breakout or a bear breakout from the 2 day trading range.
Finally, there have been many breakout attempts over the past 4 month and each has failed. As long as the chart is sideways, betting on reversals every 2 – 3 weeks is better than expecting a successful breakout. But, one will probably come soon once Brexit is resolved.
Overnight EURUSD Forex trading
The EURUSD 5 minute chart has been in a 30 pip range overnight. It is still within yesterday’s range, which was within Friday’s range. Traders might try to keep today as a 2nd consecutive inside day. There might be Brexit news later this week, and traders might want to stay neutral ahead of it.
Because the range has been small, day traders have been scalping. Can today break strongly above or below yesterday’s range? Probably not. Consequently, there will probably be buyers around yesterday’s low and sellers around yesterday’s high.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
The Emini is still on its weekly sell signal. This 3 day reversal down might be the start of 2 months of sideways to down trading.
Because yesterday was a weak buy signal bar, there were likely to be more sellers than buyers above its high. Today gapped up and sold off, closing the gap.
On the 5 minute chart, today was a bear channel. A bear channel is a bull flag. The late rally today broke above the bear channel. Tomorrow will probably be sideways to up.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
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Charts use Pacific Standard Time
When I mention time, it is USA Pacific Standard Time (the Emini day session opens at 6:30 am PST, and closes at 1:15 pm PST). You can read background information on the intraday market reports on the Intraday Market Update page.