E-mini daily chart
E-mini gapped down Monday on the daily and weekly charts and sold off strongly to far below the weekly bull channel and the 50-day MA. It reversed up from below the 100-day MA, the 4300 Big Round Number, and below both the Aug. 19 and the Aug. 3 lows, which means the August low.
Yesterday was a bear bar closing on its low. It is a Low 1 sell signal bar for today. The bulls, however, see it as a pullback from Monday’s strong reversal up from major support in a bull trend. Today’s FOMC statement report is a catalyst for a big move in either direction. Traders are deciding if a 15% correction to below 4,000 has begun or if the selloff is just another one of many sharp selloffs since the pandemic crash. Traders bought every one, and they soon had a new high.
This is the first one to reach the 100-day MA since last October. Additionally, the monthly chart should have consecutive bear bars starting in September or October because of the unusual streak of bull bars. Therefore, this is different from all of the past selloffs. There is a 50% chance that Sept. 2 will remain the high for 2021.
The 50-day MA has been support since last year’s reversal up. Monday’s selloff fell far enough below so that it might now be resistance. E-mini might test it today before or after the FOMC report. There will probably be at least a small 2nd leg sideways to down within a week or so. However, if today’s FOMC announcement leads to a strong rally, Monday might be a V-bottom and the end of the selloff. If there is a new high within the next few weeks, it will probably fail above 4600. August would then be a Final Bull Flag.
Since the 100-day MA was support on Monday, the E-mini might have to go sideways for a couple weeks as traders decide if the 100-day support is more important than the 50-day resistance. It is common for a market to enter a trading range once it has a big reversal down from a buy climax. Traders then decide if the bull trend will resume or reverse.
Emini 5-minute chart and what to expect today
E-mini was up 25 points in the overnight Globex session.
Yesterday was a triangle and there was a small bear breakout at the end of the day. Today might open with a bull breakout after a failed bear breakout. That would increase the chance of a rally today, which will open around the 60-minute EMA, which might be resistance. Magnets above are the 50-day MA on the daily chart and Friday’s low, which is the top of Monday’s big gap. Also, the midpoint of August is a magnet, and it is around those 2 other prices.
While there is an FOMC statement report at 11 am PT today, trade the day like any other day until then; day traders should exit ahead of the report because there is a 75% chance of a big move in both directions in the first 10 minutes after the report. Day traders can resume looking for trades after the first 10 minutes.
Be open to anything. A relentless trend for the rest of the day in either direction only happens 20% of the time. Therefore, expect at least one reversal. About 10% of the time, there is no significant move after the report and the E-mini just goes sideways.
Yesterday’s E-mini setups
