Emini and Forex Trading Update:
Wednesday April 14, 2021
Pre-Open market analysis of daily chart
- The Emini has now had its 13th consecutive bull day streak (13 bull trend days).
- The last time it had a streak of this duration was in February of 2011. That streak lasted 15 days.
- The 2011 streak reversed down 9% over the next few weeks, and the Emini had a 24% pullback in October 2011.
- Whatever happens this time will not be the same, but the important point is that when a buy climax is extreme, the bulls soon take profits. Also, the profit taking often lasts longer, and the pullback can be deeper than what traders expect.
- Another important point is that the current buy climax does not have to stop within the next few days. The Emini could form a brief pullback that could relieve some of the climax, and then the rally could resume for several more weeks. That is unlikely.
- There is also a 13-bar bull micro channel (every low of the past 12 days was above the low of the prior day).
- A lengthy micro channel means relentless, confident bulls.
- They normally will eagerly buy below yesterday’s low once they get the chance.
- However, because this rally is so extreme, the bulls might instead sell out of longs in a panic, and not buy below yesterday’s low.
- Day traders are buying every intraday selloff, because each was followed by a new high. However, the streak on the daily chart is more extreme than any other in the past 10 years. There is therefore an increased risk of a sharp pullback coming at any time.
Overnight Emini Globex trading on 5-minute chart
- The Emini is down 4 points in the Globex session.
- Since extreme buy climax on daily chart, increased chance of big trend day up or down. The bulls might get a blow-off top, and the bears might get start of 2-week selloff.
- Most days over past 6 days were mostly trading range days, but rallied at the end of the day. Day traders will continue to expect this until something else happens.
- If series of strong trend bars up or down in 1st hour, then increased chance of strong trend day.
Yesterday’s Emini setups
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- Strong rally from wedge bottom. Bulls want strong break above March 18 lower high, and then a test of the February 25 lower high.
- Strong break above March 18 lower high, would convert 3-month bear trend into a big trading range, and not necessarily a bull trend.
- 3 legs up in tight bull channel is parabolic wedge, which usually will attract profit takers.
- Wedge rally to double top in bear trend that began in January. Bears want reversal down, and break below March low, which is neckline of double top.
- Probably will turn down soon for about a week, and form a higher low after the 2-month wedge bottom. Should then get 2nd leg up.
- Trading range that began on March 9 will probably continue for at least another month.
Overnight EURUSD Forex trading on 5-minute chart
- ii on daily chart 2 days ago, is a possible Final Bull Flag. It is a magnet below. Usually a breakout above an ii Final Bull Flag reverses down within a few days, but might have to reach March 18 high first.
- Bulls want big rally today to above March 18 high, but big bull day unlikely after ii 2 days ago, and mostly trading range trading for 6 days.
- Broke above yesterday’s high, but mostly sideways in small range overnight.
- Day traders are scalping up and down. Most of trading for 6 days has been within trading ranges.
- March 18 high is a magnet above, but rally on daily chart is near enough for double top reversal down to begin at any time.
- Big bear day unlikely since tight bull channel on daily chart.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
- Finally, a bear day on the daily chart after 13 consecutive bull days.
- There was a rally to a new all-time high on the open, but then a reversal down from a wedge top and a head and shoulders top. The Emini then entered a trading range, which was also a triangle. It was a continuation of the range from the last hour of yesterday.
- It broke below a lower high major. This was also a small head and shoulders top. Since it was the right shoulder of a bigger head and shoulders top, it was a nested pattern.
- The big bear breakout reversed up from just above yesterday’s low. At that point, today was an Almost Outside Down Day.
- The reversal failed and today became an outside down day.
- Today closed back above yesterday’s low.
- If tomorrow is also a big bear day, this will likely be the start of a 5- to 10% correction.
- If not, there will probably soon be at least a small new high. However, the Emini will probably not get much above 4,200 before correcting at least 10%. April or May will likely be the high for several months, and possibly for the year.
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 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 Market Update page.