Emini and Forex Trading Update:
Monday October 14, 2019
I will update again at the end of the day.
Pre-Open market analysis
Last week was a bull candlestick on the weekly chart. It is therefore a buy signal bar for this week. But the prior 3 weeks had bear bodies and the chart has been sideways for months. Also, Friday sold off into the close. Consequently, the context is not strong for the bulls.
The Emini had a bull trend reversal 2 weeks ago after a bear trap. Friday was the 2nd leg up, which was the minimum goal for the bulls.
Friday formed a perfect double top with the high from the week before. That high was the top of the sell climax, which means it was a logical target.
Where does the Emini go from here? We need more information. The Emini is in the top half of a 4 month trading range between 2800 and just above 3000. Since the monthly charts is in a bull trend, the probability favors an eventual bull breakout. But until there is a breakout, there is no breakout. Traders are continuing to bet on reversals.
It is important to not discount the extreme brief moves up and down last week. There were several times when the Emini moved 5 or more points in 1 second. This increases the chance of a quick move down to 2700 – 2800 in October.
Overnight Emini Globex trading
The Emini is down 7 points in the Globex session. It is near Friday’s low. Friday was a reversal bar down and a 2nd leg up. It is therefore a Low 2 sell signal bar. If today trades below Friday’s low, it will trigger the sell signal.
However, Friday had a bull body and it is still in the reversal up from the sell climax 2 weeks ago. There might be more buyers than sellers below Friday’s low.
This is especially true since last week is a buy signal bar for this week on the weekly chart. But last week had a prominent tail on top. There might be more sellers than buyers above last week’s high. Also, last week’s range was big and it was an inside bar. That increases the chance that this week will stay within last week’s range.
When there is a buy signal on the daily chart, a sell signal on the weekly chart, and lots of reversal days, there is confusion. That increases the chance of at least one trend reversal today and more trading range price action. Remember, every day last week had at least one swing up and one swing down.
Friday’s setups
Here are several reasonable stop entry setups from Friday. I show each buy entry with a green rectangle and each sell entry with a red rectangle. I rarely also show limit order entries and entries on the close of bars. Buyers of the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day.
My goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not currently in the market, these entries would be logical times for him to enter.
EURUSD Forex market trading strategies
The EURUSD daily Forex chart has rallied for the past 2 weeks from the bottom of its 2 yearlong bear channel. The rally lacks consecutive big bull bars closing on their highs. In additions, the bars have prominent tails. Consequently, this rally is similar to all the other reversals up. Traders assume that it will be like the others and ultimately fail.
Bear channels often spend 20 – 50 bars within trading ranges. The past 7 weeks is an example. The top of the current trading range is the September 13 high. This rally will probably get there within a couple weeks, even if it tests the September 3 and 12 lows first. The rally might even continue up to the August or June highs.
But unless the bulls begin to get consecutive big bull bars closing on their highs, there will probably be at least one more new low in the channel. That is especially true since there is a gap and 2 measured move targets down around 1.08, which is below the October low.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been in a 30 pip range overnight. Today’s range so far is within Friday’s range. The market has lacked energy for over a month. Big moves up and down have been brief and not particularly big. As a result, day traders continue to look for 10 – 20 pip scalps.
That is what they have been doing overnight. Unless there is a surprisingly big breakout up or down today, they will continue to do that all day.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Here are several reasonable stop entry setups for today. I show each buy entry with a green rectangle and each sell entry with a red rectangle. I rarely also show limit order entries and entries on the close of bars. Buyers of the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day.
My goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not currently in the market, these entries would be logical times for him to enter.
End of day summary
The Emini traded below Friday’s low on the open. That triggered a minor sell signal on the daily chart. However, it then formed a small trading range day. The day closed near the open and formed a 2nd consecutive doji bar on the daily chart.
Every day for the past 6 days has had at least one reversal. There is no sign that this trading range price action is about to change.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
Trading Room
Traders can see the end of the day bar-by-bar price action report by signing up for free at BrooksPriceAction.com. I talk about the detailed S&P Emini futures price action real-time throughout the day in the BrooksPriceAction.com trading room. We offer a 2 day free trial.
Charts use Pacific Standard Time
When I mention time, it is USA Pacific Standard Time (the Emini day session opens at 6:30 am PST, and closes at 1:15 pm PST). You can read background information on the intraday market reports on the Intraday Market Update page.
Only 44 ticks range day. haha.