Emini in breakout mode awaiting March FOMC announcement
Pre-Open market analysis
Last week was a bear bar on the weekly chart. It is a sell signal bar for a Low 2 bear flag. This week will probably trade below last week’s low, which would trigger the sell signal. But, the weekly chart is in a tight trading range. This is a limit order market. The probability is that the tight range will continue. Therefore, this sell signal is more likely to fail than to be the start of a bear trend.
Friday was the 5th consecutive bear day on the daily chart. That has not happened since August. Consequently, the odds favor a bull day today, which means a close above the open. Therefore, the Emini will probably trend up from the open, or be a trading range day where any selloff below the open will reverse up.
The big event this week is the FOMC announcement at 11 a.m. on Wednesday. The Emini will probably be sideways until then. It might use the announcement as a catalyst for a strong breakout above the February 27 major lower high or for a strong reversal down to test the March 2 low.
Overnight Emini Globex trading
The Emini is down 13 points in the Globex session. Because it will probably gap below last week’s low, it will trigger the sell signal on the weekly chart. Since this is a sell signal, there is a slightly increased chance of a big trend down this week. However, any big move up or down will probably only begin after Wednesday’s 11 a.m. FOMC announcement. Sine that is a major catalyst, it increases the odds of mostly sideways trading before the report.
After 5 consecutive bear days on the daily chart in a 3 month trading range, the odds are against a 6th consecutive bear day. Therefore, today will probably close above its open. Consequently, even if today is in a bear trend for several hours, the odds will favor a reversal up.
If there is a Small Pullback Bear Trend, which is unlikely, the day could remain a bear trend day. More likely, the bulls will get a reversal up after any 2 – 3 hour selloff on the open. If there is a rally on the open, any late selloff will probably not lead to a close below the open. Finally, if today is a trading range day, it will probably close above the open.
After 11 a.m., if the Emini is 5 points or less above or below the open, it will probably get drawn to the open as a test. Yet, the odds still favor a close above the open.
Friday’s setups
Here are several reasonable stop entry setups from Friday. I sometimes also show limit order entries and entries on the close of bars.