Emini and Forex Trading Update:
Wednesday April 21, 2021
Pre-Open market analysis of daily chart
- Yesterday was the 3rd consecutive bear day. The bear bodies are getting bigger so the momentum down is increasing.
- These 3 bear days were caused by profit taking. Once there is profit taking in a buy climax, it usually has at least a couple legs down.
- The 3-day selloff might be the start of the Emini trying to get neutral ahead of next week’s FOMC announcement.
- The Emini has not had 4 consecutive bear days since October. That increases the chance that today will close above the open.
- A streak of 13 consecutive bull days ended last week. That was the most extreme streak since 2011.
- Streaks like that are a sign of a very overbought market. The market typically has a difficult time going much higher for several months.
- With the Emini as overbought as it is, and at the end of the March/April seasonally bullish window, the bull trend is probably converting into a trading range for the next couple months. The bottom of the range should be about 10% or more down from the high.
- Because the bull trend has been so strong, there might be one or two more brief new highs before there is a 10% pullback.
- A tight bull channel usually does not become a bear trend, without first going sideways and forming a micro double top, or a double top. The bulls will buy the 1st selloff, even if it is 10%.
- The Emini might have to go sideways for many days before it goes down.
Overnight Emini Globex trading on 5-minute chart
- Down 3 points in the Globex market, but still in middle of yesterday’s trading range.
- Bulls want measured move up from yesterday’s double bottom.
- 60-minute EMA was support for the past month. It is now resistance unless the bulls can break 20 points above it.
- Bears want breakout below yesterday’s low, and 20-point measured move down, based on the height of the trading range.
- The bulls are concerned about 3 consecutive bear days, but know a 4th one is unlikely. They will buy selloffs, especially in the final hour.
- The bears want a 4th consecutive bear day, which would increase the odds that a 10% correction is underway. They will sell rallies, especially in the final hour.
- Bears need more than a 4th bear day to convince traders that the market is correcting. They need a big bear day closing near its low.
- That is unlikely, given how strong the rally on the daily chart has been.
- Traders expect confusion and a lot of trading rang trading today. There should be at least one swing up and one swing down.
- If there is a series of strong trend bars in the 1st hour in either direction, traders will look for a trend day.
Yesterday’s Emini setups
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- Reversing down from 3rd leg up in tight bull channel, so parabolic wedge rally.
- At bottom of December/March trading range and 50% pullback.
- Should soon get minor reversal down, for a couple weeks to around 50% pullback and April 8 low, which was the start of the wedge.
- Bulls want Small Pullback Bull Trend to continue up to above January high.
- Bears want resumption of 4-month bear trend.
- 9-month trading range likely to continue for at least a couple more months.
Overnight EURUSD Forex trading on 5-minute chart
- Sold off overnight in Trending Trading Range Day, which is a weak bear trend.
- Trading range for 5 hours, so day traders are buying reversals up, and selling reversals down for scalp.
- Bulls hope for higher low major trend reversal back to open of day, so that today will be High 1 buy signal bar on daily chart.
- Bears want breakout below 5-hour trading range, and for today to close near its low.
- Most likely will not be strong bull or bear trend today. Day traders will probably scalp all day.
- If today closes near its low, then increased chance of lower prices for a couple weeks.
- If today reverses up and closes near its high, bulls will expect higher prices tomorrow.
- However, probably limited upside over next week, since 2-week pullback likely soon.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
- Bull Trend From The Open, became Small Pullback Bull Trend.
- Broke back above 60-minute EMA.
- Evolved into trading range midday, as often happens.
- Trend resumption up in final hour resulted in test of open of week. Bulls want 5th consecutive bull bar on weekly chart, which would be unusual.
- On daily chart, big bull bar. But, after 3 consecutive bear days and 13-day streak of bull days, trading range likely soon.
- Might get one or two brief new highs before 5 – 10% pullback.
- Day after buy climax has 75% chance of at least a couple hours of sideways to down trading starting by end of 2nd hour.
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.