End of day comments about today’s Emini price action and day trading: strong bear trend day
Although a trading range day was likely after yesterday’s strong bull trend reversal, today was a trend from the open bear trend day. The selloff was much deeper than what was likely, given how strongly up yesterday was. However, I mentioned that the bears might get a sharp leg down because the 60 minute chart might be forming a triangle and it needed one more leg down to complete the pattern. The bear trend almost completely reversed yesterday’s bull trend.
Today ended as a big inside day and there is now a bear ioi setup on the daily chart. This means that today is a bear day inside of yesterday, and yesterday was an outside day (its high was above the high of the day before, and its low was below the low of that day, Tuesday). This is a breakout mode setup. Bulls tomorrow will buy above today’s high, but that is very unlikely to happen. Bears will short below today’s low for a leg down on the daily chart. It looks like the Emini will fall to the August low soon. It might gap down tomorrow and that gap could become a measuring gap.
S&P500 Emini intraday market update for price action day traders: probable trading range day for day traders
Posted 7:15 a.m.
The Emini sold off on the open to the 60 minute moving average. The bear bars had prominent tails below and yesterday was a strong bull trend day. While it is possible that today will reverse yesterday and become a bear trend day, it is more likely that the initial selling will be part of a trading range day. It is deep enough and strong enough to make a bull trend day unlikely. Since yesterday was such a big day, today might become an inside day. With yesterday’s strong buying, it is unlikely that today will be a strong bear trend day.
The bulls might be able to rally to a new high of the day, but if they do so, the open of the day will probably be a magnet and the day will probably then end up as a doji day, closing around the open.
Unless there is a strong breakout up or down, day traders will trade today like a trading range day. They will look to buy low, sell high, and scalp.
The Emini’s price action yesterday was very strong for swing trading, and day traders will probably have follow-through buying at some point in the next few days. However, it was a buy climax and it might pull back or have a couple of small, trading range days first.
Before the open comments on S&P500 Emini 60 minute, daily, weekly, and monthly candle charts
The Emini reversed up strongly from 1 tick below last week’s low, forming a double bottom reversal. The bulls need to get above the neck line of the double bottom, which is Monday’s high of 1971.00. If so, it might rally for a measured move up. However, since the Emini is in a 4 month trading range, most breakouts will fail (for example, today failed in its breakout below last week’s low). This means that a rally above the neck line will probably fail as well, and the trading range will probably continue. Until there is a strong breakout up or down with strong follow-through, day traders will assume that breakouts will fail and they will look for reversals. Because the Emini has had two strong legs down and two strong legs up, but it is sideways, it might be forming a triangle on the 60 minute chart. It needs one more leg down to complete the pattern. A trading range is a triangle if it is sideways, convergent, and has at least 3 legs up or down.
The reversal up today was so strong that there will probably be follow-through buying over the next few days, but it might have a small pullback first after such a climactic bull trend reversal.
See the weekly update for a discussion of the weekly chart.