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Emini has streak of 6 consecutive bear days

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Emini and Forex Trading Update:
Tuesday May 4, 2021

Pre-Open market analysis of daily chart

  • Yesterday broke above Friday’s high, and therefore triggered a High 1 buy signal on the daily chart.
  • Friday was a bear day on the daily chart and therefore this was a weak buy setup. Emini streak of 6 consecutive bear days.
  • 6 consecutive bear bars is rare, especially in a bull trend. Increased chance of bull body tomorrow.
  • However, also increased chance of big bear day. This is because the streak represents sustained profit taking, even though only small so far.
  • Additionally, it follows rare streak of 13 bull days in April, which might be a blow-off top.
  • Last week is sell signal bar on weekly chart. If today falls below last week’s low, it will trigger a weekly sell signal.
  • Bulls need consecutive closes above Thursday’s all-time high, which was the April high, to make traders believe that the bull trend is resuming.

Overnight Emini Globex trading on 5-minute chart

  • Down 20 points in the Globex session so should have a big gap down. That will support the daily sell signal and probably the weekly sell signal as well.
  • Bears want this to be the start of a selloff for a few weeks.
  • Bulls want the sell signals to fail, and for the bull trend to resume.
  • After 6 consecutive bear days on the daily chart, there is an increased chance of today closing above the open. If the Emini is within 10 points of the open in the final hour, it will probably get drawn to the open. Then, traders will decide if today will finally be a bull day.
  • Big gap down means Emini will be far below the EMA, which is a measure of the average price.
  • Bears do not like to sell far below average. They want the Emini to go sideways to up to the EMA. They then look for a double top or wedge top to sell.
  • A big gap down is bearish, but bulls expect the Emini to test the EMA. They will look to buy a double bottom or wedge bottom for a reversal up to the EMA.
  • If there is a series of strong trend bars up or down, the day could form a Trend From The Open. That happens about 20% of the time. More likely, the Emini will enter a trading range for the 1st 1 hour or two.

Yesterday’s Emini setups

Emini bear channel with 6 consecutive bear days on daily chart.

Here are several reasonable stop entry setups from yesterday. I show each buy entry with a green rectangle and each sell entry with a red rectangle. Buyers of both the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).

My goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not currently in the market, these entries would be logical times for him to enter.

If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.

EURUSD Forex market trading strategies

EURUSD Forex daily chart

  • Friday was a big enough Bear Surprise Bar to make a 2nd leg sideways to down likely, even after yesterday’s bull bar.
  • Yesterday was a bull bar, which is disappointing follow-through for the bears. This reduces the chance that the selloff will become a bear trend.
  • Today has traded below yesterday’s low, which triggered a Low 1 sell signal. But yesterday was a bull day and therefore a weak sell signal bar.
  • Since today traded down, it met the goal of at least a small 2nd leg sideways to down. Bears want more selling to at least midpoint of April rally.
  • Today traded below last week’s low, so also triggered sell signal on weekly chart.
  • But after 3 strong weeks, selloff will probably be minor. That means a couple weeks sideways to down.
  • Bottom of 11-day trading range.
  • Bulls want reversal up today or tomorrow, which would be a micro double bottom at bottom of 11-day trading range.
  • 4-week rally was extreme, so probably will trade sideways to down for a couple weeks.

Overnight EURUSD Forex trading on 5-minute chart

  • Sold off overnight to below yesterday’s low and last week’s low, triggering daily and weekly sell signals.
  • Barely triggered the sell signals, and then reversed up for the past couple hours.
  • The rally has been more than 20 pips and it has been in a tight bull channel. It is strong enough so that bull day traders will look to buy pullbacks for scalps.
  • Overnight selloff was a Small Pullback Bear Trend. Therefore the 2-hour rally is probably going to be minor. That means there should be a test down within a couple hours. Bears will therefore sell rallies.
  • With bulls buying reversals up for scalps, and bears looking to sell a resumption down for a scalp, EURUSD should be in a trading range for at least a couple hours. It will probably be in a trading range for the rest of the day.
  • The bears will try to get trend resumption down. But that is unlikely after a good reversal up from support.
  • The bulls will try to get a trend reversal up, which is unlikely after a Small Pullback Bear Trend that lasted many hour.

Summary of today’s S&P Emini futures price action and what to expect tomorrow

Emini Bear Trend Then Wedge Bottom and Bull Trend Reversal

Here are several reasonable stop entry setups for today. I show each buy entry with a green rectangle and each sell entry with a red rectangle. Buyers of both the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).

My goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not currently in the market, these entries would be logical times for him to enter.

If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.

End of day summary

  • Big gap down, triggered Low 1 sell signal on daily chart and buy climax top sell signal on weekly chart.
  • Bear trend from the open.
  • Reversed up from wedge bottom just above bottom of 2-week trading range.
  • Rallied in bull channel to above start of the wedge and and closed in the top 3rd of the day.
  • 7th consecutive bear day and close near high of day so probably will close above the open tomorrow.

See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.

Trading Room

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.

  • in double top and double bottom entries where we should place our stops?
    For double top can we place the stop above the signal bar or previous swing high.

    • There are always choices. Traders who want a higher winning percentage use tighter stops. This who want bigger profits, but are willing to risk more, use wider stops. Both are good choices and the net profit after 10 trades is about the same, assuming the setups and stop choices are reasonable.

      For a double top, there are several variables, and they influence a trader’s decision, If there is a strong sell signal bar but a weak entry bar, it is better to rely on the stop above the sell signal bar. If the entry bar is a strong bull bar and a credible buy signal bar, it’s okay to exit above the bull bar.

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