Emini and Forex Trading Update:
Monday November 16, 2020
I will update again at the end of the day.
Pre-Open market analysis
The Emini on Friday reversed up from a micro double bottom. It triggered a weak High 2 bull flag buy signal. However, before the open today, Moderna announced that its vaccine is 94% effective. This resulted in a sharp rally, and the Emini will gap up today.
Last Monday, Pfizer made a similar announcement before the open. The Emini gapped up to a new all-time high, but then sold off all day. Will today do the same thing? If it does, today will be a sell signal bar for tomorrow. The bears will have a double top with last week’s high.
But today may do the opposite. The Emini could rally strongly to above last week’s high. Day traders should be ready for anything. If there is a series of strong trend bars up or down on the open, there will be an increased chance of a trend from the open.
More often when there is a big gap up, the Emini goes sideways for an hour or two until it gets closer to the EMA on the 5-minute chart. That is a trading range open. The bears want a wedge top or a double top. The bulls want a pullback to the EMA that forms a wedge bottom or a double bottom.
If there is a trading range open, which is likely, the trend that follows typically does not last all day. There is usually another trading range or a small reversal late in the day.
Overnight Emini Globex trading
The Emini is up 31 points in the Globex session. But it was up 50 points an hour ago on the release of the Moderna vaccine news. This reversal down increases the chance of a trading range open, which is already likely because of the likely big gap up.
Day traders always have to be open to anything. Even with the overnight gap up and reversal down, today could still be a bull trend day.
Since day traders expect a trading range open, they will be quick to take profits on any sharp move up or down on the open. If there are 2 or 3 big trend bars on the open, but then a reversal, that would increase the chance of other reversals over the 1st couple hours, which would create a trading range open. But if a trend on the open continues to 5 or more bars, day traders will begin to consider that the opening trend could be the start of a trend day.
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. 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 down last week from an Expanding Triangle top. The bears want today to reverse down from a lower high and continue down to the November 4 low.
However, the rally 2 weeks ago was strong. The bulls think that today’s high might not have adequately tested the high of that rally. They therefore should buy around last week’s low. If they do, there will be a small double bottom bull flag. They then would try to get a break above the November 9 high.
I continue to make the point that the EURUSD has been in a trading range for 4 months and that traders expect reversals. Everyone know that there will eventually be a breakout. Until there are consecutive closes above or below the range, traders will continue to take quick profits, and sell reversals down and buy reversals up.
Overnight EURUSD Forex trading
The 5-minute chart of the EURUSD Forex market overnight broke above Friday’s high and then reversed down. The bears want a break below yesterday’s low so that today will be an outside down day on the daily chart. If today closes near its low, whether or not today is outside down, the odds will favor lower prices tomorrow.
The bulls know that and want to prevent that. Therefore, they will look for a buy setup around yesterday’s low. They will then try to get today to close back up in the middle of the day’s range. That would increase the chance that tomorrow will be sideways instead of down.
The overnight selloff has not been strong. While it is easier to make money selling in a reversal down, unless the selloff becomes bigger and more persistent, the bulls will expect a trading range to begin to develop. If one begins to form, they will buy reversals up from the low for scalps.
Because today is a lower high after an Expanding Triangle top on the daily chart, traders are expecting at least a 1 to 2-day second leg down. Consequently, the EURUSD will probably be sideways to down for at least a day or two. If so, it will be easier for day traders to make money on shorts than longs.
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 gapped up on the Moderna’s news, but then formed a trading range day. There was a High 2 bottom near the EMA on the open, and then a parabolic wedge top at the high.
There were several more reversals, which formed a triangle. The bulls got a late breakout and today closed near the high.
After consecutive days closing near their highs, the Emini should trade higher tomorrow. The all-time high is less than 20 points above today’s high and therefore within reach 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 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.
