Emini breakout above December stock market crash high and 2800
I will update again at the end of the day.
Pre-Open market analysis
There has been only one instance of more than 9 consecutive bull bars on the weekly chart in the past 20 years. This is now the 10th week in the streak. Consequently, this week will probably close below the open of the week, which was yesterday’s open.
Yesterday created a gap up on the weekly chart. If the bulls take profits this week, their selling will probably close the gap above last week’s high. In addition, there would finally be a bear body on the weekly chart. If so, the Emini will probably pull back for 2 – 3 weeks and 50 – 100 points.
Sell signal on the daily chart
Yesterday was the best bear bar in 2 months. In addition, the daily chart is in a parabolic wedge buy climax at major resistance. The reversal is taking place just above 2800. The bulls have failed many times at and above 2800 for more than a year. Also, yesterday was a failed breakout above the December stock market crash high.
Consequently, if today forms a buy signal bar, the bears will be more willing to sell above its high and above yesterday’s high. The odds are that a 2 – 3 week pullback is beginning, even if there is a brief push above yesterday’s high.
This is a logical area for the bulls to begin to take some profits. If they do, they usually will wait about 10 bars before buying again. Therefore, there will probably be a 2 – 3 week pullback beginning this week or next week.
Can the bears get a strong selloff? Probably not. When a bull channel is tight, the 1st reversal down is typically minor. However, if the bears can create a trading range for a couple of weeks, they will have a double top. That would have a better chance of a bigger pullback.
Overnight Emini Globex trading
The Emini is down 6 points in the Globex session. The daily chart is still in a Small Pullback Bull Trend. As a result, yesterday’s selloff will probably lead to another 1 – 2 day pullback. The bulls will then try to resume the breakout above 2800 and the triple top.
But, the odds are that the daily chart is transitioning into a pullback for 2 – 3 weeks. Therefore, the bears will be more willing to sell rallies and above prior highs.
On the 5 minute chart, yesterday was a bear channel. A bear channel is a bull flag. There is a 75% chance of a breakout above the bear channel today or tomorrow. But, the daily chart is losing its bullishness. Consequently, a rally today will probably lead to a trading range and not a strong bull trend.
Can yesterday’s selloff continue today? Yes, but the selloff was weak. Until the bears create a strong reversal down on the 5 minute chart, the best the bears will probably get is a trading range over the next week. Since yesterday looked like a bear leg in a trading range, today will probably have at least one bull leg lasting 2 – 3 hours.
Yesterday’s setups
Here are several reasonable stop entry setups from yesterday. I show each buy entry with a green rectangle and each sell entry with a red rectangle. I rarely also show limit order entries and entries on the close of bars. My goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not currently in the market, these entries would be logical times for him to enter.
EURUSD Forex bear flag at bottom of 4 month trading range
The EURUSD daily Forex chart has been in a tight range for 6 days. The bears want this to be the top of a bear flag. They then want a break below the November low and 1.12.
However, the bulls either want a bull breakout above the bull flag, or a bear breakout and then a double bottom with the February low. Since most trading range breakout attempts fail, the bull case is more likely. But, it is only slightly so.
This is because the 4 month range is about twice as long as every other range over the past 2 years. Consequently, it is likely to break out soon. The continuation of the trading range means the odds favor a leg up after the February leg down.
But the extreme duration of the range increases the chance of an impending successful breakout. That breakout has a 50% chance of being down. The result is that the probability now only slightly favors a continuation of the range instead of a bear breakout.
Over the past 2 weeks, almost every leg up and down reversed after 2 – 3 weeks. Therefore, the odds favor a test down by the end of next week. If there is one more push above last week’s high and then a reversal down, the bears would have a wedge bear flag. That is a reliable pattern. However, the selloff would probably form a higher low.
Overnight EURUSD Forex trading
Today is the 5th day in a 50 pip tall tight trading range. When the range is small like that, it means day traders are scalping. Since there is no sign of a breakout of this 6 day range, day traders will continue to scalp.
The odds favor a break of the 6 day range within a week. But there will probably be sellers above 1.14 because that would be about a 50% pullback, and the 3 week rally is still a bear flag. Also, a reversal there would lead to a test of the February low, which is likely.
There will also likely be buyers below 1.13. That would be about a 50% pullback of the 3 week rally and a test of a Big Round Number.
With buyers below and sellers above, even a breakout this week will probably not go very far.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Here are several reasonable stop entry setups for today. I show each buy entry with a green rectangle and each sell entry with a red rectangle. I rarely also show limit order entries and entries on the close of bars. My goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not currently in the market, these entries would be logical times for him to enter.
End of day summary
Despite 2 strong rallies today, the Emini formed a trading range day. It closed at the open and it is a weak High 1 bull flag for tomorrow. However, Monday was a strong sell signal bar in a parabolic wedge buy climax. In addition, 2800 has been resistance for over a year. Consequently, there might be more sellers than buyers either above today’s high or Monday’s high.
The open of the week is a strong magnet above. Therefore, the Emini will likely test it one more time this week. If the bears can get the week to close below the open, they will break the streak of 9 consecutive bull bars on the weekly chart.
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.
