Emini and Forex Trading Update:
Thursday October 10, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini is back in the August trading range and it is again having abrupt big reversals up and down. Yesterday reversed Tuesday’s selloff. But since it was only a bull doji bar, it is a weak buy signal bar for today.
After 2 big down days and 3 trading range days, traders expect more uncertainty. That means more trading range price action on the daily and 5 minute charts.
This is a Breakout Mode situation, which means that the bulls and bears are balanced. When that is the case, there are always both reasonable buy and sell setups, and each has about the same probability.
The bears see last week’s rally as a pullback from last week’s selloff. The bulls see this week’s selloff as a pullback from last week’s rally. Until there is a sustained move up or down, traders will take quick profits and look for reversals.
Overnight Emini Globex trading
The Emini is down 5 points in the Globex session. However, it sold off 40 points at the start of the session and then reversed up strongly over the next couple of hours. It has been going sideways over the past 10 hours.
This is consistent with what I have been saying all week. The Emini is back in the August trading range where there were many violent reversals. It is now at the same price and behaving the same way. Traders are looking for reversals, even when there is a strong move up or down.
The day session will probably open in the middle of yesterday’s range. Less likely, there will be a gap up. That would create a 2 day island bottom.
It does not matter. Day traders have been looking for an early trend and then a late reversal over the past week. The tails above and below the bars on the daily chart are a reflection of that.
The trends up and down have been big enough for swing trading. But each of the past 3 days had at least one reversal.
Day traders today will again be quick to exit a trend and take an opposite position on a reversal. This is a musical chairs situation. Everyone knows that one of these days, there will not be a reversal and the trend will last all day. Until then, day traders will be ready for a 2nd, opposite trend every day.
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 broke above the top of the wedge bear channel overnight. This was likely since it was not far above the October 1 low. The rally will probably continue up to the September 13 high.
The wedge bottom on the daily chart is a micro wedge bottom on the weekly chart (not shown). That will probably lead to at least 2 small legs up on that timeframe. Consequently, the small 2 legs up on the daily chart will probably be a complex 1st leg up. That makes the rally likely to last at least a few more weeks. Traders expect sideways to up to at least the September 13 high.
Overnight EURUSD Forex trading
The EURUSD 5 minute chart broke out to the upside early in the European session. While it has spent a lot of time going sideways since then, the pullbacks have only been 10 pips. Therefore, day traders are only looking to buy.
The lack of progress to the upside means that they are now buying and scalping. This is a Small Pullback Bull Trend. Day traders will only look to buy until there is a 20 – 30 pip pullback.
At that point, they will also start to sell for scalps. They will look to sell reversals down for 10 pip scalps. But since the daily and weekly chart will probably work higher over the next few weeks, it will be easier for day traders to make money buying pullbacks than selling rallies.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
I will post chart after the close.
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 rallied strongly on the open in a Bull Trend From The Open. The buy climax reversed down to the Final Bull Flag and the Emini entered a trading range for the rest of the day.
This was the 4th day this week with a strong reversal. Traders therefore will expect at least one reversal tomorrow. With all of the reversals this week, the odds are against a strong trend day up or down tomorrow.
After 3 weeks with bear bodies on the weekly chart, this week will probably have a bull body. That is because the weekly chart is in a trading range, and 3 consecutive bear bars is a little extreme.
The Emini tomorrow will probably get drawn to the 2941.50 open of the week after 11 am PST tomorrow, and both tomorrow and the week will likely close at least 1 tick above the week’s open.
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.
