Emini and Forex Trading Update:
Friday November 6, 2020
I will update again at the end of the day.
Pre-Open market analysis
Yesterday was the 5th day in the rally from the double bottom on the daily chart. It stalled at the bear trend line from the September and October highs. If it turns down from here, there will be a triangle on the daily chart. However, since it is already in a trading range, it is already in Breakout Mode.
With the 5-day strong rally, the odds favor higher prices. But today was the 6th consecutive day that closed near the midpoint of the day’s range. That is a sign of some hesitation.
Also, after a strong rally on the daily chart, many bulls will take some profits soon. This could result in a bear day at any point. However, the rally is strong enough so that traders will buy the 1st 1 to 3-day selloff.
The rally should continue up to the October 12 lower high. It could even continue to above the September all-time high within a week or so.
Today is the last day of the week, so weekly support and resistance can be important, especially in the final hour. The most important magnets are last month’s high, which about 20 points above yesterday’s high, and last week’s high of 3430, which might be too far below to reach today.
Overnight Emini Globex trading
The Emini is down 15 points in the Globex session. After an extreme rally this week, there is an increased chance of some profit-taking today. That could result in either a trading range or a bear trend day.
Yesterday was a trading range day. It had a clear double top and a clear double bottom. Because the daily chart is so overbought and at resistance, if there is a break above the double top, there would be an increased chance of a reversal back down.
But if there is a bear breakout of yesterday’s range, there is an increased chance that the profit-taking could last all day. That means if today is going to be a trend day, down is slightly more likely.
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. I rarely also show limit order entries and entries on the close of bars. I do not want the lines to be distracting. If they are longer, I make them dotted. But, they have to be visible, so I make the shorter ones solid. 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 reversed up from below the bottom of the 7-week tight trading range this week and then above the top. This is a strong reversal. Traders will buy the 1st 1 – 3 day pullback, confident that there will be at least a small 2nd leg up.
The momentum up this week has been enough to make a test of the September high likely within a couple weeks. That is the top of the wedge on the weekly chart and the top of the 4-month trading range. If the bulls can get a couple closes above that high, traders will expect the rally to continue to the next resistance. That is the February 2018 high at around 1.25.
Since the EURUSD is still in a 4-month trading range, there is still a 50% chance that this rally will fail around the September high. The odds will go up if the rally starts to stall next week.
Overnight EURUSD Forex trading
The 5-minute chart of the EURUSD Forex market rallied strongly overnight to above last week’s high, and the high of the 7-week trading range. It barely broke above and then has been sideways for a couple hours. That is a sign that it might enter a trading range around last week’s high for the remainder of the day.
While day traders have only been buying, there was a 20-pip pullback about an hour ago. That is enough for some day traders to begin to sell reversals down for scalps, betting on a transition to a trading range for the remainder of the day.
Last week’s high will probably be a magnet for the rest of the day. The bulls want the week to close above last week’s high. That would increase the chance of higher prices next week.
The bears want today to reverse down. But they would need the week to close at least 20 pips below last week’s high to significantly increase the chance that the EURUSD will stay in the 7-week range.
Day traders will continue to buy pullbacks today unless there is a strong reversal down. Since the EURUSD will probably enter a trading range around last week’s high, the bulls will switch to scalping.
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. I do not want the lines to be distracting. If they are longer, I make them dotted. But, they have to be visible, so I make the shorter ones solid. 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 sold off on the open to below yesterday’s low, but reversed up from a High 2 bottom. It then remained in a trading range until the final hour. It then rallied to a new high, but reversed back to the middle of the days range, like 5 of the past 6 days.
It is a High 1 buy signal bar on the daily chart, but since it is a doji at the top of a 4-month trading range, it is a weak buy setup.
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.
Hi Al,
Was it better to buy bar 40 instead of 39? I waited for failed BO PB (Bar 40) but you marked blue box on bar 39. Thank you.
Wei