Emini August ledge top and Breakout Mode

Emini and Forex Trading Update:
Tuesday September 3, 2019

I will update again at the end of the day.

Pre-Open market analysis

The Emini on Friday sold off from the top of its 4 week trading range. It was the last day of the month and August closed above its midpoint. That is a sign of strength for the bulls.

Last week also closed near its high. On the weekly chart, it is a buy signal bar for this week. But stop entries in tight trading ranges are lower probability setups. Furthermore, the odds still favor another leg down after the unusually strong selloff in early August.

However, neither the bulls nor the bear have given up. The 4 week trading range means that the daily chart is in Breakout Mode. That means that the probability of a rally to a new high is about the same as for a selloff down to the June low.

With 4 tops in the trading range, there is now a variant of a ledge top. Consequently, there will probably be a break above last week’s high within a week or two. Additionally, there will likely be a reversal attempt.

Traders need to see consecutive bull bars closing near their highs and above the trading range before they believe the 2019 bull trend is resuming. Until then, there is a slightly greater chance of a 2nd leg down from the July high.

Overnight Emini Globex trading

The Emini is down 16 points in the Globex session. Despite the 2 day selloff from the top of the August trading range, this is probably a minor reversal down. The ledge top on the daily chart tells us that the bulls will probably buy within a day or two. The odds favor a break above the 2944.25 ledge top this week. Therefore, there is an increased chance of a bull trend day today or tomorrow, even if there is more selling first.

Yesterday’s big bear breakout on the 5 minute chart was strong. It might lead to a bear channel with 3 pushes down. Less likely, it is the start of a trend down from the top of the 4 week trading range. If the bears get 2 or 3 big bear bars early today, today could be a bear trend day.

However, the odds favor a break above 2944.25 within a week or so. Consequently, day traders should be looking for a bottom soon that will lead to at least a 2 – 3 day rally.

Friday’s setups

Here are several reasonable stop entry setups from Friday. I show each buy entry with a green rectangle and each sell entry with a red rectangle. I rarely also show limit order entries and entries on the close of bars. Buyers of the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day.

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.

EURUSD Forex market trading strategies

The EURUSD daily Forex chart has had 7 consecutive bear trend days. Since that is unusual, it is unsustainable and climactic. The bears now have a big profit and a stop that is far above. They will begin to take some profits, especially since the chart is at the bottom of a yearlong channel.

While climactic, the selloff is strong. Consequently, the 1st rally will probably go only 100 – 200 pips before the bears will sell again. There are also bulls who bought below the August low. They too will sell the 1st bounce, looking to get out with a smaller loss.

With both bulls and bears looking to sell the 1st rally, it will likely be minor. Traders should expect a bear flag. Most bulls will want at least a micro double bottom before looking to buy for a short-covering bounce.

Overnight EURUSD Forex trading

The EURUSD 5 minute Forex chart sold off in the Asian session. However, it has been in a 25 pip trading range in the European session. Traders know that the daily chart is in a sell climax at support. Consequently, many bears will switch to selling rallies instead of selling at the market.

Also, day traders expect a 100+ pip rally over the next 2 weeks. Furthermore, the odds favor a 50 pip bounce within a couple days. Now that the chart is sideways, they are beginning to buy reversals up. Most day traders expect a small trading range for at least a couple days and will start to scalp instead of simply swing trading shorts.

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. I rarely also show limit order entries and entries on the close of bars. Buyers of the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day.

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.

End of day summary

After a brief early selloff to yesterday’s low, the Emini formed a trading range day. Today was an inside day in the middle of a 5 week trading range.

Today closed near the open but above its midpoint after a 2 day pullback. It is a High 1 buy signal bar for tomorrow. But since its range was small and it closed near the middle, it is a weak buy setup.

Because the 5 week range has a ledge top, there will probably be at least a brief bull breakout within a couple weeks. However, this pullback might have to reach the middle of the range before the bulls will buy again.

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

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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.

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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 Intraday Market Update page.

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