Emini and Forex Trading Update:
Monday May 3, 2021
Pre-Open market analysis of daily chart
- Emini formed 5 consecutive bear doji bars in a tight trading range this week. This is a Breakout Mode pattern.
- Only 2 strong bull bars in past 11 days, even though strong bull trend in March and April.
- Streak of 13 bull bars that ended April 16 is probably an exhaustive move. Traders should expect a 10% correction to begin in May or June.
- Last week was a bear reversal bar, and therefore a sell signal bar for this week.
- The next couple of reversals down might fail, like all of the prior attempts. There might be one or two more new highs before a correction begins, but the Emini will probably not go much higher before there is a 10% correction. The correction should lead to a 2-month trading range.
- Picking a top is a low probability bet. There have been many tops since the pandemic low, and all failed. It is always more likely that a top will fail and that there will be another new high.
- But it is increasingly likely that there will be a 10% correction. Experienced traders can begin to scale into shorts, but they need to trade small and use a wide stops.
Overnight Emini Globex trading on 5-minute chart
- Up 14 points in the Globex session.
- 5 consecutive bear days in a bull trend is unusual. Today should close above the open and be a bull day on the daily chart.
- Bulls also want a close above Friday’s high, which would increase the chance that last week was just a bull flag. They would expect higher prices and a new all-time high this week.
- Bears hope last week will be a top. They need a close below the 5-day tight trading range. If they get a close on the low of the day, and far below last week’s low, traders will expect at least a couple legs sideways to down.
- 5 consecutive doji bars in a tight trading range is a Breakout Mode pattern. Traders are deciding if it is a bull flag or a top. There is an increased chance of a strong trend up or down.
Friday’s Emini setups
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- Friday was big bear bar after consecutive parabolic wedge tops in the April rally. This is a Bear Surprise Bar, which usually will have at least a small 2nd leg down.
- Last week was bear sell signal bar on weekly chart, but after 3 strong bull bars, so minor sell signal.
- Consecutive small wedge tops in April, usually leads to a couple legs sideways to down.
- Bears want resumption of the January bear trend.
- More likely will get a couple legs sideways to down over the next couple weeks.
- April was a Small Pullback Bull Trend. 1st reversal down will probably be minor, but it could retrace about half of the rally and test 1.19.
- Bulls want today to be a bull bar closing near its high. Today would then be a buy signal bar for a failed bear breakout. Odds still favor 2nd leg sideways to down.
Overnight EURUSD Forex trading on 5-minute chart
- Fell below last week’s low, which triggered minor weekly sell signal.
- Reversed up overnight from just below last week’s low. This reduces chance of big bear day today.
- Overnight rally has been small and Friday was big bear day. This reduces chance of big bull day.
- Bulls want today to close above the open so that it will be a bull bar on the daily chart.
- Today would then be a buy signal bar for a failed bear breakout on Friday.
- Unless today is a big bull bar closing on its high, traders will expect a couple legs sideways to down for a couple weeks.
- That means a weak buy signal bar today would likely only lead to a 1- to 2-day bounce.
- Since today will probably not be a big trend day up or down, day traders will scalp in both directions.
- The open is the most important price. A close above the open, especially if today is a fairly big bull day on the daily chart, will increase the chance of higher prices tomorrow.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
- Gap up and formed triangle, so trading range open.
- Bear breakout and then test of 60-minute EMA (not shown).
- Trading range day.
- Since lower high and lower lows, it was also bear channel.
- Today was 6th consecutive bear bar on daily chart, which happens about once a year. A 7th bear day would be even more unusual, so increased chance of bull bar tomorrow.
- 6 bear days is relentless selling, and it is coming after the April streak of 13 consecutive bull days. Increased chance of correction soon.
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.
No market view Al only work 3 days a week
I’m smiling because I work every day, but I have cut back the daily posts to 3 days a week!
In the Forex report, the portion that reads:
“April was a Small Pullback Bull Trend. 1st reversal down will probably be minor, but it could retrace about half of the rally and test 1.19.”
Should this say, “test 4.19”? It appears to have already tested 1.19.
Thanks for your query. Testing 1.19 is correct as you can see from the measured move lines drawn by Al, with the 50% at about the April 8th high.
The April 19 (4/19) low is a little higher, but close to 1.19 too. And the 50% PB is in line with a lot of sideways trading in March.