Trump rally resumption is likely bull trap at all time high
The Emini opened within yesterday’s tight range. In addition, the initial rally pulled back from the March 15 lower high. Furthermore, it failed at that price several times yesterday. These factors reduce the chance of a big bull trend day, despite a strong 2 day rally.
Because today’s opening rally does not contain many bars, the odds of a lower high major trend reversal are also small. Furthermore, the momentum up is strong and the bears will probably need at least a micro double top on the daily chart. Consequently, the Emini will probably continue yesterday’s range for the 1st hour or two. In addition, these factors increase the odds of another mostly sideways day.
Pre-Open market analysis
The Emini rallied strongly for 2 days. Furthermore, it is now testing the March 15 major lower high. I have been talking about this as a likely event for the past month.
The next target is the March 3 all-time high of 2398.00. While the daily chart is having a strong breakout above a bull flag in a strong bull trend, the weekly chart has a very unusual buy climax. If that were not the case, the odds would favor a strong breakout above 2,400.
Yet, the weekly sell climax will probably cause the rally to fail. All prior similar buy climaxes in the 8 year bull trend reversed down to the weekly moving average within 27 weeks. Hence, the odds are that he Emini will fall to 2,310 within a few weeks. Therefore, this current strong rally will probably fail.
Since the 2 day rally has been strong, the daily chart will probably need at least a micro double top before the bears can create a reversal down. Hence, the Emini will probably be sideways for at least a couple of days. If the bears get their reversal, it could create a double top with the March all-time high.
Bull and bear relative strengths
The 2 day momentum and the daily bull trend are good for the bulls. The weekly buy climax is good for the bears. The bears additionally have a possible double top with the all-time high. Furthermore, yesterday’s breakout above the March 15 lower high was weak.
Since the dominant feature in the Emini is the weekly buy climax, the odds are that the current rally will fail within a few weeks. The minimum target over the next month is a test of the weekly moving average. That is about 75 points below.
Overnight Emini Globex trading
The Emini is up 1 point in the Globex market. In addition, it has been in a tight range all night. Furthermore, yesterday had a lot of trading range trading after a 2 day buy climax. Finally, yesterday reached the March 15 major lower high, but failed to break strongly above it. These factors make a trading range day likely today.
EURUSD Forex market trading strategies
The EURUSD Daily chart rallied strongly for 3 weeks. Yet, the rally contained a series of buy climaxes. This therefore reduces the odds that it will continue much longer without a pullback. Furthermore, it has had 4 pushes up. This usually leads to a pullback lasting several days. Since Monday’s gap is an obvious magnet, the odds are that the daily chart will pull back at least another 70 pips.
While the bulls hope that the 3 week rally will lead to a measured move up above the 6 month range, most breakouts fail. Therefore, the odds are that this one will as well.
Even if the bulls are successful, their rally is still in the middle of the 2 year range. Since there is no sign of a breakout of that range, the current rally at best is just another leg in the range. The range will continue indefinitely until there is a strong breakout with follow-through.
Overnight EURUSD Forex trading
The EURUSD Forex market sold off 70 pips overnight in a tight bear channel. Since the consecutive buy climaxes of the past 3 weeks should lead to at least 2 legs down, the odds are bears will sell the 1st rally. Because the 1st leg down has been about 70 pips, the rally from the lower high will probably fall about 70 pips as well.
Since the bulls are trying to create a double bottom over the past 3 hours, the bear rally could start today or tomorrow. The highest probability trade over the next week is to sell a reversal down from a rally with a stop above yesterday’s high, expecting a test of Monday’s gap.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
The Emini had a buy climax just below the all-time high. Its high was tested later in the day and led to another strong reversal down. The bears see the daily chart as having a lower high major trend reversal. Since today closed on its low, it is a sell signal bar on the daily chart. Because the chart has an 8 day bull micro channel, the bears might need a 2nd entry sell. A gap down tomorrow would create an island top. The math for the bears is excellent over the next several weeks.
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.