Emini and Forex Trading Update:
Thursday May 16, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini yesterday formed an outside up day. This is the 2nd one in a week. A 2nd bottom attempt has a higher probability of success. There is an increased chance of a bull trend today and of a gap up.
However, the 3 week bear channel is tight. Consequently, even it the Emini rallies over the next week, it will probably form a lower high. A 2nd leg sideways to down is likely before the bulls get their new high.
Overnight Emini Globex trading
The Emini is up 10 points in the Globex session. Today therefore might have a small gap up. Small gaps typically close in the 1st hour.
However, because of consecutive bottoms on the oversold daily and 60 minute charts, the odds favor a rally for at least a few days over the next week. It might have begun yesterday. Consequently, day traders should be ready for an increased chance of a bull trend day today.
In addition, even if the day is a trading range day, if the daily chart is beginning a leg up, there is an increased chance of a close near the high of the day. Day traders should look for a buy setup in the final hour for a late rally.
Finally, whenever the odds of a bull trend are higher, so are the odds of a bear trend. This is because when something seems likely, there is the potential for a crowded trade. Many traders might buy early, betting on a trend. If one does not develop, they might sell and not buy again today.
The absence of buyers could then lead to a bear trend on a day that was likely to rally. If the Emini enter a bear trend, it could last all day. But, the odds favor at least a weak bull trend today and a few days of sideways to up trading.
EURUSD Forex market trading strategies
The EURUSD daily Forex chart has been sideways for 3 weeks. There is a double top and 2 higher lows. This is therefore a triangle and it is another breakout mode pattern.
Since the chart has been in a bear channel for a year, the odds favor a new low. However, most prior bear rallies went further above the EMA than this one. Consequently, there is slightly better than a 50% chance that the 3 week rally will test the April 12 high before there is another new low.
Because the chart is at the apex of a triangle, it is in Breakout Mode. There is almost a 50% chance that the breakout will be up or down. In addition, there is a 50% chance that the 1st breakout will fail and reverse within a day or two.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been in a 30 pip trading range overnight. Day traders are looking for 10 pip scalps up and down.
Because the daily chart is at the apex of a triangle, traders know that there is an increased chance of a 50 pip breakout up or down in the next few days. Furthermore, a successful breakout will probably lead to at least a few days of a trend.
But, until there is a breakout, there is no breakout. Day traders will continue to take small scalps.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
I have been saying for several days that the Emini would probably test last Friday’s high. In addition, I said that today had an increased chance of being a bull trend day. Today’s strong rally reached the target, but the bulls took profits there. The Emini then entered a bear channel and gave back half of the rally.
This is disappointing for the bulls. Disappointment is consistent with the rally leading to a lower high on the daily chart, even if it lasts a few days.
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 Intraday Market Update page.
Hi Al, in general, if a trader is buying closes, is it better to get out with a 2 point profit than to hold for a swing which may result in small loss or a break even trade. Given the context of a day like today.
In general, if the market is early in a bull trend, it is better to hold for a swing. However, if it is late and near significant resistance, it is better to scalp for 1 – 2 points, depending on the size of the bars.
Hi Al, at what point would you consider the market became always in short today? Thanks
Al called AIS on bar 68 after the breakout below Lower Low ledge/TTR. You can see this on the Daily Update chart at BrooksPriceAction.com