FOMC Fed interest rate hike creating breakout modePre-Open Market Analysis
The Emini gapped down yesterday and therefore created a 3 day island top. It trended down, but found support at the moving average. While an island top late in a bull trend has an increased chance of leading to a swing down, most reversals become trading ranges. The bears need strong follow-through selling today or tomorrow.
Since island tops often lead to island bottoms, the Emini might gap up one day later this week. That would therefore create an island bottom and it would be a sign that the bulls regained control.
Today will probably not add information because the market will probably want to remain neutral going into tomorrow’s FOMC announcement. Since the FOMC statements are in transition, there is an increased chance of a big move after tomorrow’s announcement. Furthermore, there is an increased chance that it could lead to a move up or down that could continue for a week or more.
While today is the last day of the month, it will probably not significantly change this month’s appearance. Support is at this month’s open and low. Therefore, those are magnets today.
Overnight Emini Globex trading
While yesterday’s rally lasted 5 hours, it was in a broad bull channel and it failed to make a new high. It was therefore probably a bear flag. The Emini is down 6 points in the Globex session. Hence, it is in yesterday’s 4 hour trading range. In addition, traders are waiting for tomorrow’s FOMC Fed interest rate hike announcement.
The Emini is in a big up, big down pattern over the past 5 days. In addition, it had a big down, big up pattern yesterday. Therefore, it will probably be sideways today. While a big trend is possible, it is unlikely. Hence, the odds favor both at least one swing up and down. Traders need to wait for evidence of which will come first today.