Emini and Forex Trading Update:
Friday September 6, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini broke above the top of the 5 week trading range yesterday. I have been saying that a bull breakout was highly likely because of the ledge top. Furthermore, I said that the breakout would be big enough for traders to wonder if the bull trend is resuming. I thought that 30 – 50 points was a reasonable minimum goal. However, there will also probably be a pullback below the top of the ledge within a couple weeks.
Yesterday rallied strongly on the open and then entered a trading range. It spent a lot of time around the July 18 neck line of the double top on the daily chart. That might be a magnet for another day or two.
When there is a big gap up, the Emini often goes sideways for a few days before deciding if the breakout will continue or reverse. Because traders are deciding, the odds favor more trading range trading today.
Weekly support and resistance
Today is Friday so weekly support and resistance can be important. The most important price is the 2944.25 top of the ledge. However, the bulls will probably hold today above that level. In addition, they want the week to close on the high. The bears always want the opposite. There is often a move toward or away from weekly support or resistance in the final hour of the week.
Overnight Emini Globex trading
The Emini is up 10 points in the Globex session. It will gap far above yesterday’s close and it might gap above yesterday’s high. The 3,000 Big Round Number is a magnet just above.
However, the Emini often goes sideways for a few days after a big gap out of a trading range. Also, the 5 week ledge top is a magnet below. That might limit the upside over the next few days.
Finally yesterday was a trading range day. These factors reduce the odds of a big trend day up or down today.
But even if today is another trading range day, the daily ranges have been big lately. As a result, the legs up and down will be big enough for swing trading.
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. 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 rallied for 3 days from a test of the bottom of 2 bear channels. However, yesterday’s candlestick had a big tail on the top and its high was at the resistance of the EMA. In addition, it was around a 50% pullback from last week’s selloff. The bears want the rally to be simply another lower high in the 2 bear channels. One began 22 months ago and the other started with the June 18 low.
The bulls are hoping that yesterday is just a pause in a reversal up. But the 3 day rally had only one strong bull trend day. Also, it followed 6 bear days. It is therefore more likely a minor reversal than the start of a big move up.
However, the move up was big enough to generate confusion. When there is confusion, the chart usually has to go sideways for 2 – 3 days before one side takes control.
Overnight EURUSD Forex trading
Today’s low is above yesterday’s low and its high is below yesterday’s high. It is therefore an in inside day, which is neutral. Furthermore, yesterday was a doji bar and today so far is a doji day. A doji is a sign of a balanced market.
Today is Friday and weekly support and resistance can be important. The bulls want this week’s candlestick to be a strong bull reversal bar on the weekly chart. Therefore, the would like today to close near yesterday’s high, which is the high of the week.
The bears at a minimum want no bull body on the weekly candlestick. They will try to get today to close below the 1.0993 open of the week. That might be too far below. As an alternative, they want as small a bull body as possible on the weekly chart.
The 5 minute chart has been in a 30 pip range overnight. Day traders therefor have been looking for quick profits. There is no sign that this is about to change. But day traders should watch for moves toward the week’s open or high late in the US session.
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
The Emini formed a 2nd trading range day after yesterday’s break above a ledge top. There will probably be a pullback below the ledge top within a couple weeks. The bears want it to grow into a bear trend. However, the bulls hope that it will be a bull flag.
Whenever there is a gap above major resistance, there is an increased chance of a gap down. If there is a gap down next week, there would be an island top.
It is important to understand that island tops and bottoms are minor reversal patterns. Most do not lead to trends. Because the August selloff was so strong, an island top in this case would have a better chance of starting a swing down to below the bottom of the range.
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 Intraday Market Update page.
Is it a good short at bar 39? A sell stops below the low of the bear bar, and it’s a breakout. It’s a good scalp.
Hi J, I’m curious what Al might think about 39, but I’ll give it a try. 39 looks like it is at the bottom of a fairly tight TR that has lasted for 2.5 hours, with the 60 min. ema right below it’s low.
While some sort of a test of the low of the channel or low of the day was probably likely, I think any 2nd leg that is a BO below the TR, the open of the day, and the 60 min. ema would not be a high probability trade. Here, I think an experienced trader might have landed a decent scalp, but most traders would be better off looking for the BO to fail and preparing to buy.
The bear body of bar 39 looks good enough for at least a 1:1 profit target scalp.
It sat at the open of the day, and at ema. But the price action dedicates it will extend further, I took the trade with half size.
That’s my thinking.