Trading Update: Monday November 15, 2021
Emini pre-open market analysis
Emini daily chart
- Strong reversal up on Friday after 5 consecutive bear bars. Emini is testing the 4700 Big Round Number.
- The November 5th top came from just below the top of the 15-month bull channel. Some traders believe that the resistance was not adequately tested. They want to see a reversal down from above the top of the channel. Since the channel is rising, the top is now around 4740. It is a magnet above.
- I wrote last week that while the selloff was strong, every strong selloff since the pandemic crash was a bull flag and led to a new high.
- What is different this time is that the November 5 high was a reversal down from the top of a month-long parabolic wedge and the top of a 6-month bull channel. That increases the chance of at least a small 2nd leg sideways to down before the rally gets much above the high or above the top of the 15-month bull channel.
- But even if there is a double top reversal, traders will still buy it.
- This has been an extremely strong bull trend and at no point did the bears ever have more than a 50% chance of a trend reversal.
- They will need an extremely strong selloff, probably to below the bottom of the bull channel, before many traders will think that a correction is likely. Until then, they will buy every reversal down.
Emini 5-minute chart and what to expect today
- Emini is up 15 points in the overnight Globex session.
- It will gap up. The bulls want a strong breakout above the 4700 Big Round Number and then a new all-time high.
- However, Friday had a very strong rally, but then entered a trading range for several hours. That is an area of agreement and therefore a magnet. If there is a reversal down in the 1st couple hours, it will probably continue down to the middle of Friday’s range.
- The Emini went sideways for several days last week around 4700. Also, the selloff had 5 consecutive bear days, which is relentless selling. Both of these facts increase the chance that yesterday’s rally will stall again here for at least a couple days.
- While a trading range around 4700 is likely for a few days, any day can be a trend day. If there is a series of strong trend bars in the 1st hour, traders will expect a trend day.
- If there is a trend, up is more likely after Friday’s strong rally.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- I have been writing regularly for a couple months that the EURUSD would probably have to fall below the March 9, 2020 high.
- That is because it has been in a trading range for 7 years and when in a trading range, a leg up usually begins after falling below support.
- That high was the breakout point of last year’s strong rally. It is therefore important support and a strong magnet. The EURUSD broke below it last week.
- I also said that the selloff might continue down to below the June 10, 2020 high, which is a less important breakout point.
- Since the EURUSD has already done the minimum, there is now an increased chance of a reversal up at any time.
- Last week’s big bear day was a strong enough Surprise Bar for traders to expect at least a small 2nd leg down.
- The EURUSD will probably fall below the June 10, 2020 high because the momentum down is strong and that price is almost exactly a measured move down from the October trading range.
- There is only a 30% chance that this year’s bear trend will continue all of the way to the bottom of last year’s rally or below the bottom of the 7-year range.
- However, if the bears continue to form bear bars on the weekly and month charts, that probability will go higher.
- While the selloff should go a little lower, there is better than a 50% chance that there will be a 1- to 2-month rally from around where the EURUSD currently is or from around the June 26, 2020 low, which was the 1st pullback from last year’s breakout of the triangle bottom.
- With important magnets just above 1.14 and the momentum down strong, the odds favor at least slightly lower prices over the next couple weeks.
- Since major currency reversals have an increased chance of beginning at the start of a year, the selloff might continue through December.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
- The Emini had a small gap up, but it closed in the first hour, which is typical with small gaps.
- After trading in a tight trading range for a couple hours, there was a Major Bear Surprise Bar.
- Since its low was at the 60-minute EMA and one tick below yesterday’s trading range low, it was a good candidate for a 2nd Leg Bear Trap. And that is what it turned out to be. Bears bought back shorts and bulls bought, betting on a bounce.
- The Emini then entered a lower trading range and formed a Bear Trending Trading Range Day.
- The bears see today as a lower high sell signal bar for tomorrow. There is now a lower high double top on the daily chart with the November 5 all-time high.
- However, the Emini is more likely to continue the 8-day tight trading range for at least another day. The bulls will probably try again to get above 4700 and the November 5 all-time high before they would consider giving up.
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 charts begin at 6:30 am PT and end at 1:15 pm PT which is 15 minutes after the NYSE closes. You can read background information on the market reports on the Market Update page.