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Emini 9-day bull micro channel means aggressive buying but buy climax

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Emini and Forex Trading Update:
Thursday April 8, 2021

Pre-Open market analysis of daily chart

  • Yesterday was the 9th consecutive bull bar on the daily chart. A streak that only happens about once a year. It is therefore unsustainable and climactic. Should get bear day this week.
  • 8 days with low above low of prior day so 9-day bull micro channel. This also only happens about once a year. Traders have been so eager to buy, that they have been buying above the prior day’s low for 8 days. Should get pullback within a few days.
  • Bulls normally would be eager to buy below yesterday’s low once they get a chance. However, when a buy climax is this extreme, a sharp reversal can come at any time. Look at June 5, September 2, and October 12 as examples of buy climaxes that led to big, abrupt reversals.
  • No sign of a top, and no pullback on daily chart in 2 weeks. Traders are so eager to buy pullbacks that the pullbacks are only coming intraday.
  • 3 sideways days, so increased chance of a breakout up or down today.
  • Unless there is a series of strong trend bars, day traders will expect at least one reversal again today.

Overnight Emini Globex trading on 5-minute chart

  • Up 8 points in Globex session so probably will gap up again today. Likely gap up to another all-time high.
  • Extremely overbought, but daily chart is in a blow-off top, and therefore can get more overbought.
  • If there is a rally on the open, increased chance of midday or late reversal down.
  • If there is a series of strong bear bars in 1st 2 hours, could get big bear trend day because of how overbought daily chart is.

Yesterday’s Emini setups

Emini trading range day closing on its high. Emini in 9-day bull micro channel 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

EURUSD Forex minor rally from wedge bottom
  • Possible micro double top in 4-month bear channel.
  • After wedge bottom, 2nd leg up likely. If there is a selloff, it will probably only last a few days, and reverse back up from a higher low.
  • Reversal up from wedge bottom typically has at least 2 legs up, and it usually reaches the top of the most recent sell climax. That is the March 18 high at the 1.20 Big Round Number.

Overnight EURUSD Forex trading on 5-minute chart

  • Traded a fraction of a pip below yesterday’s low and reversed up.
  • In very tight trading range overnight. Day traders are buying reversals up, and selling reversals down from 10-pip scalps.
  • Day traders will continue to scalp unless there is a strong breakout up or down, which is unlikely today.
  • Since rally on Monday and Tuesday was extreme, probably limited up side from here without more sideways to down.
  • Traders are looking to buy a pullback on the daily chart, which reduces chance of big bear day.

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

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

  • Gapped up to new all-time high, but immediately sold off to below yesterday’s high.
  • Reversed up from a High 2 pullback to the EMA and yesterday’s close, and from a 50% pullback.
  • Bear buy signal bar and 6 big early bear bars made strong bull trend unlikely.
  • Weak Small Pullback Bull Trend for most of the day, but no close below the EMA until 10:40 am PST. That is a sign of relentless bulls.
  • Stayed in sideways to up trading range around open of day for most of day, but rallied strongly to a new high at the end of the day.
  • Today was the 10 day with a bull body on the daily chart, which is unusual and therefore a buy climax.
  • Today’s low was above yesterday’s low so today was 11th day in bull micro channel. That is also a buy climax.
  • Today is the 3rd leg up in a parabolic wedge.
  • The streak of bull days, the micro channel, and the parabolic wedge usually will attract profit takers. But there is no top yet and traders will continue to buy in a buy climax until there is a clear reversal.
  • Increased risk of sharp selloff because buy climax is extreme.
  • But even if bears get 10% pullback, bulls will buy it since bull channel is tight.

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.

  • Dear Al,

    Was shorting bar 7 a scalping? As you said, 4 bear bars but tails and small bodies and probably TRO. At the open, I watched the MKT pulled back after gap up and kept looking to long H2 or WB around EMA and hoping for the test of Globex’s high. I didn’t think about shorting.

    Thank you.

    • I said in the chat room that this was probably going to be a Trading Range open and that the reversal down would probably be minor.

      However, there is always a 30% chance that a minor reversal will lead to a major reversal. I would only sell it for a swing trade, but an early trading range with buyers around the EMA was more likely.

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