Emini and Forex Trading Update:
Wednesday March 10, 2021
I will update again at the end of the day.
Pre-Open market analysis
The Emini has been in a trading range since early February. There have been many strong legs up and down, but every one reversed. Yesterday was another example. The Emini rallied but could not hold above 3,900, and closed in the bottom third of its range (Emini another lower high).
This rally is a test of 3,900 and the March 4 and the February 24 lower highs. Last week’s streak of 3 big bear bars was the most sustained selling since the 10% corrections in September and October.
As long as the Emini continues to make lower highs, it is in an early bear channel. But because it has been sideways for a month, the bears only have a slightly higher probability of a downside breakout, than the bulls have of a breakout above the 4,000 Big Round Number. The bulls need a strong break above the February 24 lower high to flip the odds in their favor.
Overnight Emini Globex trading
The Emini is up over 20 points in the Globex session. The bulls want the rally to test the February 24 lower high, which is a magnet above. Right now, the Emini is struggling with the 3,900 Big Round Number, as it has been for a month.
Because there is room to that lower high, and the 3-day reversal has been reasonably strong, traders expect at least slightly higher prices. However, each of the past 4 days has had reversals. Day traders expect at least one reversal today.
Since the daily ranges have been big, the legs in the reversals have been swing trades. For example, yesterday began with a strong bull trend, and ended with a strong bear trend. Also, with the Emini in the middle of a 3-week trading range, and with yesterday being Big Up, Big Down, there is an increased chance of a trading range day, which means more than one reversal. Can today be a big trend day up or down? While it might begin that way like yesterday, day traders are expecting at least one reversal.
Yesterday’s setups
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
The EURUSD Forex market on the daily chart formed a bull reversal bar yesterday in an extreme sell climax. It was caused by the bears taking profits.
The short covering might only last a day, like on March 2, but this selloff is extreme. The move down from the February 25 high is a parabolic wedge. Also, there is a wedge bull channel with the January 1 and February 5 lows. At a minimum, there should be a pullback above the February 5 breakout point by the end of next week. The short covering could continue for a couple weeks and reach the March 3 high.
What traders are now deciding is if yesterday will be the low, or if there will be one more brief low first. The November 4 low is an important magnet on the weekly chart. The EURUSD will probably get there within a couple months. But it will likely work higher over the next couple weeks, even if there is one more brief new low first.
Overnight EURUSD Forex trading
The 5-minute chart of the EURUSD Forex market has been sideways over night. It’s high is below yesterday’s high and its low is above yesterday’s low. It is an inside day so far.
This is the 4th consecutive day when it is testing 1.19. The bulls want today to go above yesterday’s high and trigger a buy signal. That would increase the chance that the EURUSD has put in a minor low.
The bears, however, want today to close near its low. Today would then be a sell signal bar on the daily chart after only one day of profit taking, like March 3. What is different this time is how extremely oversold the EURUSD is. That increases the chance of higher prices, which means the bulls have the best chance of forming some bull days since early February.
The EURUSD sold off overnight and then reversed up. However, the reversal has not been strong, and the EURUSD has spent move of the time in small trading ranges on the 5 minute chart. Day traders are buying and selling for scalps. But because of the extreme sell climax, there is an increased chance of at least small bull trend days over the next couple weeks.
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
The Emini had a Low 2 top and then a wedge High 2 bottom on the open. It then formed a trading range day around the 3,900 Big Round Number and the open of the day, and closed near the open. Today was a small bull doji bar on the daily chart.
Most days since early February have tested 3,900. Traders are still deciding if the Emini will continue up to 4,000 or down for 10%. Unless the bulls get a strong break above the February 24 lower high, last week’s 3 consecutive bear days makes it slightly more likely that the Emini will go down before reaching 4,000. But a single big bull day would flip the odds in favor of the bulls.
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 Standard Time
When I mention time, it is USA Pacific Standard Time (the Emini day session opens at 6:30 am PST, and closes at 1:15 pm PST). You can read background information on the intraday market reports on the Market Update page.
