President Trump and January effect stock market rally
While the Emini gapped down and had a bear bar, the 1st 2 bars had tails below. In addition, they were at the bull trend line and the 60 minute moving average. Furthermore, the selloff at the end of Friday was weak. Finally, limit order bulls made money.
While this is trading range price action, the bears still have a reasonable chance to get below Friday’s low. The Emini is Always In Short. Yet, the bears need consecutive big bear bars to convert the selloff from Friday’s high into a bear trend. At the moment, this selloff is more likely a bear leg in a trading range.
The bulls are trying to get another Opening Reversal up from the 60 minute moving average. Yet, there has been enough selling in a tight bear channel so that the 1st reversal up will probably be minor. Hence, the best the bulls will probably get over the next hour is a trading range. However, without stronger bear bars, the best the bear will probably get is a test of Friday’s low.
Since neither side is very strong, the odds are that this will be another trading range open for the 1st hour or two. Furthermore it increases the chances of another trading range day.
Pre-Open Market Analysis
The Emini broke to a new all-time high on Friday. Yet, it did so with a buy climax. In addition, it stalled immediately after the new high. Furthermore, the weekly chart had a bear bar on the week before. That is a bad buy signal bar, especially in a 3 bar tight trading range. Hence, the bulls need strong follow-through buying to overcome these problems.
While they might get it, the odds of significantly higher prices without at least a 20 – 100 point pullback are less than 40%. Because Friday’s rally was strong, the bulls have a 50% chance of follow-through buying in the 1st 2 hours today. However, since the buying was climactic, there is also a 75% chance of at least a 2 hour trading range, beginning by the end of the 2nd hour.
Overnight Emini Globex trading
The Emini is down 2 points in the Globex session. Because Frdiay’s rally was strong, the selloff from the high is more likely a bull flag than a bear trend reversal. Yet, on the 240 minute chart, the bears have a credible Higher High Major Trend Reversal. Yet, they do not yet have a strong bear breakout. Since most major reversals lead to trading ranges and not opposite trends, that will probably happen here.
Unless the bears get a strong reversal down this week, the odds still favor a breakout above 20,000. However, if the market continues to fail to do something, it usually then tries to do the opposite. The odds still favor a 100 point selloff to test the August high within the next couple of monhts.
EURUSD Forex Market Trading Strategies
After 2 strong bull days, the EURUSD daily chart had bad follow-through on Friday. Since the EURUSD is still in a bear channel, the probability was that the follow-through would disappoint the bulls. Yet, last week was a good buy signal bar on the weekly chart. Furthermore, the context was good for the bulls. There was a wedge lower low major trend reversal buy setup. Hence, as with all major reversal setups, there is a 40% chance of a swing up over the next several weeks.
Overnight EURUSD Forex trading
The EURUSD Forex market traded in a narrow range overnight. The odds favor a test of last week’s highs, but this selloff might test down to the 1.0582 higher low 1st. If it reversed up from there, it would form a double bottom higher low major trend reversal (DB HL MTR).
The bears see last week’s low as the neck line of a double top. They want a breakout below and then a measured move down to par. Because the momentum up was strong last week first.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
I am traveling tomorrow and will not post.
The bulls were unable to create follow-through buying after Friday’s rally. The Dow is still close enough to 20,000 to make it likely to get there this week. Yet, whether or not it does, it and the Emini will probably sell off about 5% over the next 2 months.
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.