![\"Bull](\"\/wp-content\/uploads\/2014\/09\/ES18-600x288.jpg\" "\\"\\"")
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The Emini reversed up from below yesterday’s low and then formed a trend resumption bull trend day. The early bull breakout (green bar) controlled the price action for the day.<\/p>\n
The Emini reversed up from below last week’s low, but every bull bar in the rally to the 60 minute moving average had bad follow-through. This price action made a trading range likely. After a trading range with two big legs down, the Emini had a trend resumption up to a new high above the 60 minute moving average.<\/p>\n
Posted 7:35 a.m. PST.
\nThe Emini opened with a big gap down to below the bottom of the month long trading range and the bottom of a 2 week bear channel. As expected in this context, it immediately reversed up and closed the gap, creating a bull trend reversal for day traders. However, the buy signal bar and entry bar were weak, and so was the follow-through. This was trading range price action and it might be a sign that trading range psychology will dominate the day.<\/p>\n
The big bull trend bar at 7:20 a.m. PST probably will control the price action for the next couple of hours. The follow-through was weak, but the bar was strong enough so that traders will look to buy pullbacks. The market has rallied 10 points above the open and that makes a bear trend day unlikely. Since today will therefore either be a bull trend day or a trading range day, traders will look to buy pullbacks. If selling pressure increases, they will also sell rallies.<\/p>\n
The Emini bears twice last week tried to get a downside breakout of the month long trading range, and both attempts were followed by a reversal up on the next day. <\/p>\n
I mentioned in the trading room on Tuesday that the 60 minute chart might create a right shoulder of a head and shoulders top if it rallied. The Emini rallied only one day and then broke to the downside. I said that this was terrible symmetry since the left shoulder of the pattern lasted several weeks. When a pattern does not look quite right, the probability that it will work is less.<\/p>\n
The Emini made a 2nd strong attempt to break below the trading range on Thursday, but this was met with strong buying on Friday. Whenever a market disappoints traders, it is usually in a trading range. The selloff from the all-time high of two weeks ago is therefore more likely a bear leg in what will become a big trading range, and less likely the start of a bear trend. A reasonable initial target for the bears is the August low around 1900.<\/p>\n
Most bear channels become trading ranges, and bulls therefore see them as bull flags. The bulls hope for a bottom within that range and then a resumption of the bull trend. Just like the bears need follow-through from their downside breakout, if the Emini breaks above the September high, the bulls will need follow-through as well. Without it, breakouts up and down will just enlarge the height of the range and not lead to a trend.<\/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
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