Emini and Forex Trading Update:
Monday September 9, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini gapped above the month-long trading range on Thursday. But Thursday and Friday were trading range days. The bulls did not get strong follow-through buying and the bears do not yet have a reversal down.
There is still a 50% chance that the breakout will reverse down before the Emini rallies to a new high. There is at least a 60% chance of a pullback below the top of the ledge within a couple weeks.
If the Emini gaps down any day this week, there will be an island top with Thursday’s gap up. Island tops are minor reversal patterns. However, the context is good for the bears. If there is a gap down, there is an increased chance of a selloff that could last several weeks.
Traders know that the Emini could continue up or reverse down. They are waiting for more information. Until there is follow-through buying or a strong reversal down, the Emini will remain neutral on the daily chart.
Overnight Emini Globex trading
The Emini is up 10 points in the Globex session. The bulls want today to close above the 3,000 Big Round Number. That is psychological resistance. If they succeed, the Emini will then probably test the all-time high this week.
However, as strong as the September rally has been, there is still only a 50% chance that this rally will lead to a strong break above the old high. Until there is a breakout, there is no breakout.
The past 2 days were trading range days in a 2 week bull trend. Markets tend to continue what they have been doing. Consequently, there is an increased chance of more trading range price action today. This is true even if the bulls break above the 3,000 resistance level. It is common for a market to break through support or resistance and then oscillate around that magnet for a few days.
Day traders know that the Emini is at resistance. As a result, there is an increased chance of an unusually big trend day up or down. But they will continue to expect trading range price action and reversals until they see a strong breakout up or down.
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 sold off in 3 legs since the July 25 high and reversed up from the bottom of 2 bear channels last week. The wedge bottom reversed up, but the rally had only one big bull bar closing on its high and it stalled at the 20 day EMA.
So far, this is a weak reversal. The bears see it as a bear flag. But it is strong enough so that the bulls will probably get at least a small 2nd leg up this week. If that 2nd leg stalls after a day or two, then the 2 week rally will probably be a bear flag. The result would likely be a new low within a few weeks.
Alternatively, the 2nd leg might have 2 or 3 big bull bars closing near their highs. If so, the rally will then test the August 26 or even the August 6 highs. That would increase the chance of the bulls converting the bear channel into a trading range for a few months, like after the November and April lows.
Overnight EURUSD Forex trading
Last week was a doji bar on the weekly chart and today so far is the 3rd consecutive doji bar on the daily chart. The overnight range has only been 27 pips. This is a 3 day trading range. While the odds favor at least a small bull breakout and 2nd leg up, the bears might first get one more day down.
After 3 trading range days, day traders will expect more trading range price action today. So far, they have been looking for reversals to scalp for 10 pips. But there is a slight bullish bias over the next few days after last week’s reversal up from a wedge bottom at the bottom of 2 bear channels.
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 reversed down from above Friday’s high and broke below Friday’s low. Today was therefore an outside down day. A gap down this week would form an island top with Thursday’s gap up. There is a 50% chance that last week’s bull breakout will fail.
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.
