The Emini daily chart had an outside down day yesterday that closed below Tuesday’s low. It is therefore a sell signal bar for today. Furthermore, yesterday was the 3rd leg up in a small parabolic wedge on the daily chart and a 60-minute wedge rally. In addition, it was just below the resistance of the 2800 Big Round Number and the March major lower high. Today might therefore be the start of 2 or more weeks of sideways to down trading. There is an increased chance of a bear trend day today.
Since yesterday is a sell signal bar on the daily chart, traders want to know if there are more buyers or sellers below its low. Therefore, the bears will try to break below yesterday’s low in the 1st hour today to trigger the sell signal. However, they will not get a big gap down open. They are therefore not as strong as they could have been.
They need a big bear today today and again tomorrow to make traders believe that they are in control of the daily chart. At a minimum, they want the week to have a bear body. That means their minimum goal for the week is to have tomorrow close below 2784.50. If they achieve that, this week will be a sell signal bar for next week on the weekly chart. That would increase chance of lower prices over the next few weeks.
The bulls would like today to be an inside day with a close above the open. Today would then be an ioi bull flag on the daily chart. The bulls will therefore buy an early selloff to just above yesterday’s low. If today falls below yesterday’s low, the selloff will trigger a sell on the daily chart. However, the bulls would then try to get a reversal back up, which would make the sell signal fail.
The Emini is up 7 points in the Globex session. Yesterday ended with an expanding triangle bottom after the FOMC report. The bulls hope it will be a bull flag and that the 2 week rally will continue up to the March high.
Since yesterday is a sell signal bar on the daily chart, there probably will be a selloff in the 1st 2 hours to test yesterday’s low. If so, traders will look for a reversal up from around yesterday’s low. The minimum goal for the bulls is a trading range day today. Next, they want a close above the open and a bull inside day. A big bull trend day is unlikely after yesterday’s strong reversal down.
If there is a strong break below yesterday’s low, today could be a big bear trend day. The 1st target for the bears is 2763.75. That is the beginning of the wedge rally on the 60 minute chart. If the bulls cannot get a reversal up from around yesterday’s low, they will probably find support there. The odds are that the Emini will test that low within a week because of the wedge top on the 60 minute chart.
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