Emini and Forex Trading Update:
Friday October 11, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini in the Globex session is up 28 points. Today will gap above the 4 week bear channel and possibly above the earlier high of the week.
Last week’s reversal up from a bear trap made at least a small 2nd leg up likely. Today is that 2nd leg. The bulls want the rally to continue up to a new high. Their minimum goal was a test of the top of the first leg up. That was last Monday’s high and they will likely achieve that on the open. Next, the want a test of last week’s sell climax high. That is the October 1st high of 2994.00.
Overnight Emini Globex trading
The Emini today will gap above yesterday’s high and possibly Monday’s high. A big gap up increases the chance of a trend day. The trend could be up or down, but a big gap up makes a bull trend more likely than a bear trend.
When there is a big gap up, the Emini is far above the EMA. Traders do not like to pay a lot more than the average price. Consequently, a big gap up usually has a trading range open for the first hour or so.
The bears want a double top or wedge rally, hoping for an early high of the day. However, the bulls will look to buy a reversal up from a double bottom or wedge bottom near the EMA.
It is important to remember that every day this week had at least one reversal. While there is an increased chance of a trend day, day traders will be prepared for reversal in the middle of the day or late in the day.
EURUSD Forex market trading strategies
The EURUSD daily Forex chart broke above the 4 month wedge bear channel yesterday, but closed below the bear trend line. The bull breakout continued overnight. Since there is a micro wedge bottom with a good buy signal bar on the weekly chart (not shown), the EURUSD will probably continue sideways to up for a few weeks. This is true even if there is a pullback to the October 8 minor higher low first
On the daily chart, the bars are not big and most have tails on top. This is not how a bull trend typically looks. Therefore, the rally is probably going to be a bull leg in the bear channel, like all of the other rallies over the past year. Traders will look for it to last a few weeks, test one of the prior lower highs, and then reverse down to a new low. Since they expect it to continue through October, they will buy pullbacks.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart rallied 60 pips over the past 4 hours. It broke above yesterday’s high, and today will probably close above the 4 month bear trend line. The bulls would like today to close on its high. That would increase the chance of higher prices next week.
Also, today is Friday and this week is the entry bar for the wedge bottom on the weekly chart (not shown). A close on the high of this week’s candle would further help the bulls. Their minimum target is the 20 week EMA, which is about 50 pips above today’s current high.
The overnight rally was parabolic, and the bears got a 25 pip pullback over the past hour. That profit taking by the bulls will probably lead to a trading range for the remainder of the day.
The bulls will buy pullbacks and take profits near the high. They want the day and week to close on the high.
However, the bears will sell rallies to around the day’s high. They would like the day to close below the support of yesterday’s high. To weaken this week’s bar on the weekly chart, the bears would need today to close on its low. That is not likely.
Consequently, today will either be in a trading range for the remainder of the day, or, less likely, it continue the overnight bull trend up to the 20 week EMA at above 1.1110.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
The Emini gapped up and rallied in a Bull Trend From The Open. However, the rally stopped exactly at last week’s high, which was the top of the sell climax on the daily chart. After reversing down to a new low, the Emini then entered a trading range for the remainder of the day. With the collapse into the close, the day closed near the open. Like every day this week, it had at least one reversal (today had 3).
This week is a buy signal bar on the weekly chart, but after 3 bear bars, it is a weak setup. Also, the Emini is at the top of a 4 month trading range within a 22 month trading range. This is weak context for a rally, even though the odds favor an eventual new high.
Today had a couple instances when the Emini moved 5 or more points in 1 second. There were many other examples this week. This is very unusual behavior and it increases the chance of a big sustained move within the next week or two. If so, down is more likely than up. It increases the chance of a test of the 2700 – 2800 area by the end of the month.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
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 Intraday Market Update page.
Thanks for the response, it does make sense to me, however if we are discussing bar counting and factoring L1 and L2, could you explain why then the sell below 13 wasn’t classified as a reasonable sell. Technically speaking would that not be a low 2?
I don’t like the sale below 13 (or 14) because there is now a small pullback bull trend and therefore I would expect buyers not sellers there.
Hi Al, could you elaborate why you felt the sell below bar 5 was a reasonable sell. I feel I get confused in some BTC/STC markets. I saw a strong spike up first reversal will be bought. I feel I saw it with a higher probability than you did, your insight is appreciated.
Although bar 3 did not go below bar 2, bar 2 was a bear doji and thus acted like a L1. Bar 5 was an inside bear reversal bar closing near its low and acted like a L2 setup. Also the big tail above bar 4 made a micro DT with bar 5 and it was a first reversal setup which has a decent chance despite the strength of the opening rally.
By 3 not going below 2, the probability for 5 was slightly less, despite the close on the low, the micro double top, and the consecutive buy climaxes.
If 3 had traded below 2, then selling below 5 would have been a significantly higher probability bet. It would then be a 2nd reversal down on the open.
2 was a reasonable sell setup, so when it did not trigger, the market was telling traders that something was wrong with the bears. 5 then became the 1st pullback in a 5 bar bull micro channel, which is a lower probability trade. It was still a reasonable short, but not as good as it would have been if 3 went below 2.