Trump rally targeting 2500 Big Round Number
On the open, the Emini continued the 3 bar tight trading range from Friday’s close. This increases the chances of an attempt at trend resumption up and a test of Friday’s high. Yet, because of the Big Up, Big Down on Friday’s close, the odds are that any early rally will lead to a trading range. Furthermore, the bears will try to keep the rally from going above Friday’s high.
In addition, if there is a selloff, it will probably reverse up from around the 60 minute moving average. Consequently, there is an increased chance of an inside day.
At the moment, the Emini is deciding whether the 1st leg will be up or down. The odds are that it will reverse within 1 – 3 hours and today will be a trading range day.
Pre-Open market analysis
Friday broke to a new all-time high. Furthermore, it was a small pullback bull trend day. While there is a 50% chance of follow-through buying in the 1st 2 hours today, there is a 75% chance of at least a couple hours of sideways to down trading, starting by the end of the 2nd hour.
Because the 3 day bull breakout has been strong on the daily chart, the odds are that there will be buyers below Friday’s low. The bears will therefore need at least a micro double top before they can create a pullback lasting more than 3 days.
Overnight Emini Globex trading
The Emini is up 0.5 points in the Globex market. Since Friday was an extreme buy climax day, there is only a 25% chance of a strong bull trend day today. However, there is a 50% chance of at least some trend resumption up in the 1st 2 hours. In addition, there is a 75% chance of at least a 2 hour sideways to down move beginning by the end of the 2nd hour. Finally, since Friday was so climactic, there is an increased chance of at least a small reversal down today and a close below the open.
Since the Emini is in a buy climax on the weekly and monthly charts at a measured move target, there is an increased chance of a bear trend day. Furthermore, since a pullback to the weekly moving average is likely soon, there is an increased chance of a series of bear trend days beginning soon.
EURUSD Forex market trading strategies
While the EURUSD daily chart has been in a bull trend for 7 months, it is now at the top of a 30 month trading range. There have many many other strong rallies in the 30 months. Yet, each transitioned into a trading range for 1 – 3 months. Furthermore, this rally has a small wedge top. Since the 5 prior wedge rallies to new highs have all led to at least small trading ranges, that is likely here. Since the wedge is in its 3rd leg up and not quite at a new high, the rally might have one more brief new high first.
All trading ranges eventually break out into trends. Yet, my 80% inertia rule says that 80% of strong attempts fail. Consequently, the odds of a strong breakout from here without at least a 2 week sideways to down move are small.
In addition, there have been many rallies on the weekly chart to the top of the 30 week range. Since each led to trading ranges that sometimes lasted several months, the EURUSD Forex market will probably begin to go sideways.
Overnight EURUSD Forex trading
The EURUSD Forex market has rallied relentlessly for overnight for 5 hours. Yet, the rally was only 35 pips. Furthermore, the 5 minute EURUSD Forex chart has been in a 15 pip range for 3 hours. There are no longer many traders willing to buy at the high. This is because of the wedge top on the daily chart. In addition, it is due to the location at the top of the weekly chart.
The odds are that today will be another day with day traders mostly scalping. However, swing trading bears are beginning to sell, looking for a test down to the 1.1356 July 5 low and maybe the 1.1173 June 20 low.
Swing trading bulls are still holding for a test of the 1.12024 August 24, 2015 absolute top of the range. While the rally might eventually get there, the odds are that it will pull back at least 150 pips first. In addition, that pullback will probably begin within a week or two.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
After Friday’s buy climax, the odds were that today was going to be a trading range day. Since Friday was so extreme, the trading range price action might continue tomorrow. Today is an inside day. It is therefore both a buy and sell signal bar for tomorrow. Yet, since the 3 day rally was strong, there will probably be buyers below today’s low. The bears will probably need at least a micro double top on the daily chart before they can get more than a few days down.
Nothing has changed on the weekly chart. It is in an extreme buy climax. Consequently, it is likely to soon begin a test down to its moving average.
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.