![\"monthly](\"\/wp-content\/uploads\/2014\/10\/ES-600x360.jpg\" "\\"\\"")
<\/p>\n<\/p>\n
The Emini sold off sharply on the open and triggered a sell signal on the monthly chart by falling below last month’s low.<\/p>\n
The Emini triggered a monthly sell signal when it fell below last month’s low. Although it rallied sharply and formed a moving average gap bar at 8:10, the selloff did not lead to a major trend reversal. Instead, it was followed by a measured move down. After a wedge bottom at 12:15, there was profit-taking into the close.<\/p>\n
The daily chart had been trying to form a bull flag over the past few weeks and today broke strongly below that bull flag. The Emini will probably fall for a measured move down, which is around the 1900 target that I have mentioned many times.<\/p>\n
Posted today at 7:25 a.m. PST.
\nThe Emini sold off on the open below last month’s low and it closed the August gap on the daily chart, creating a bear trend for day traders. The initial bear trend fell for about 17 points, which makes a bull trend day extremely unlikely. The day will probably be a bear trend day or a trading range day. If it becomes a trading range day, it could rally 10 points or more since the initial selloff was so big. <\/p>\n
The Emini fell below the gap on the daily chart and below last month’s low, which triggered a second entry short on the monthly chart. It bounced at a measured move down from yesterday’s 5 minute head and shoulders top bear flag and from a bear trend channel line. Today could become a huge bear trend day and not reach the moving average all day. <\/p>\n
More likely, the selloff was a sell vacuum test of support and the market will enter a trading range. Then, it will decide between trend resumption down and trend reversal up. Until there is a clear major trend reversal or a strong bull breakout, traders should focus on selling rallies. The bars and legs are big. This means that stops are far away and traders should trade small.<\/p>\n
The monthly candle closed yesterday and it formed a bear reversal bar. This is a sell signal bar, and it is the second signal (July was the first). Bears trading the monthly chart will short 1 tick below last month’s low, looking for a test of the moving average, which currently is below 1800.<\/p>\n
The weekly chart triggered second entry short last week, but the entry bar was weak because it had a big tail below.<\/p>\n
The daily Emini has been in a trading range for over a month. The bears hope that the higher high major trend reversal of 2 weeks ago leads to a test of the bottom of the range around 1900. They do not mind if the Emini rallies to test the September 24 lower high as long as the rally forms a double top with that high. They then want a strong breakout below the neck line of that double top, which is Monday’s low. If the Emini does test that high and then turn down, that rally would be a lower high major trend reversal (the right shoulder of a head and shoulders top). Most tops fail, but this one is occurring when the monthly chart is exceptionally overbought<\/a>. This increases the probability of a correction.<\/p>\n See the weekly update<\/a> for a discussion of the weekly chart.<\/p>\n Traders can see the end of the day bar-by-bar price action report by signing up<\/a> for free at BrooksPriceAction.com. I talk about the detailed Emini price action real-time throughout the day in the BrooksPriceAction.com trading room<\/a>, and a 2 day free trial<\/a> is available.<\/p>\n
\n