Emini and Forex Trading Update:
Friday April 9, 2021
Pre-Open market analysis of daily chart
- Yesterday was the 10th consecutive bull bar on the daily chart, which is unusual and therefore climactic.
- Its low was above Wednesday’s low, so now 10-day bull micro channel. This is also unusual and climactic.
- Yesterday was the 3rd leg up in a 10-day tight bull channel. The channel is therefore a parabolic wedge, which is a buy climax pattern.
- A streak of bull days, a micro channel, and a parabolic wedge are buy climaxes, and they usually attract profit takers.
- Normally, bulls would aggressively buy below low of prior day when there is a bull micro channel.
- But the current buy climax is extreme. There is therefore an increased risk of a sharp reversal down at any time, like on September 3 or October 13.
- Buy climaxes often last much longer than what might appear reasonable. Traders will continue to buy until there is a strong reversal down.
- If series of strong trend bars up or down in 1st hour, increased chance of big trend day.
Overnight Emini Globex trading on 5-minute chart
- The Emini is down 8 points in the Globex sessions. It therefore might open near the bottom of yesterday’s climactic rally into the close.
- If so, there will be a Big Up and a Big Down. That creates Big Confusion, which typically results in a trading range. There is therefore an increased chance of a trading range open.
- The bulls want today to close above the open, and for today’s low to stay above yesterday’s low. They hope that the streak of bull days and the micro channel continues. However, both have lasted an unusually long time. There is an increased chance that today will trade below yesterday’s low and close below today’s open.
- Since the buy climax is so extreme, there is an increased chance of a big bear day today.
- What is most likely after a buy climax? Exhausted bulls, minor profit taking, and a trading range.
- Today is unlikely to be a big bull day because the buy climax is so extreme.
- Today is Friday so weekly support and resistance can be important, especially in the final hour. This week’s low is probably too far below for the Emini to get there today. However, the bears might try to get the week to close below the midpoint of the week. That would reduce the chance of higher prices next week.
Yesterday’s Emini setups
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- Bear bar after 3 small legs up in tight bull channel, so parabolic wedge top.
- Bears hope this is end of leg up in bear channel that began on January 6, and want breakout below March low.
- 7-day tight bull channel, so only 3- to 5-day pullback likely.
- March low was wedge bottom, so 2nd leg up likely.
- Yesterday traded below Wednesday’s low, and then above its high, and it was therefore an outside up day.
- Today so far has not broken out of yesterday’s range, and is therefore an inside day after an outside day.
- So far, there is now an ioi (inside-outside-inside) pattern on the daily chart. If today remains an inside day, then this is a Breakout Mode pattern for Monday. Today would be both a buy signal bar, and a sell signal bar.
- But if today remains a bear day with a close near its low, it will be a weak buy signal bar, especially after a parabolic wedge. That makes a pullback more likely than a continuation of the bull trend on Monday.
Overnight EURUSD Forex trading on 5-minute chart
- Reversed down in Small Pullback Bear Trend from yesterday’s close.
- Biggest overnight rally was less than 20 pips, so day traders have only been selling.
- Near yesterday’s low and today is about the size of an average day, so selloff will probably evolve into a trading range soon.
- Until there is at least a 20-pip bounce, day traders will only sell.
- Once there is a 20-pip bounce, day traders will also begin to buy for scalps.
- Bulls might be able to keep today from falling below yesterday’s low. Today would then remain an inside day, and there would be an ioi Breakout Mode pattern on the daily chart on Monday.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
- Wedge selloff to double bottom on the open.
- Small Pullback Bull Trend that broke above 4,100 Big Round Number.
- Late rally to measured move up based on breakout above 47-bar wedge top and bull channel.
- 11th day in bull micro channel and 11th consecutive bull day. Both are extreme buy climaxes so increased risk of big bear day next week.
- Strong bull trend so traders continue to buy, but extreme buy climax so probably profit taking soon.
- 3rd consecutive week closing on its high so increased chance of gap up next week.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
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 Time
When I mention time, it is USA Pacific Time (the Emini day session opens at 6:30 am PT, and closes at 1:15 pm PT). You can read background information on the intraday market reports on the Market Update page.