Emini and Forex Trading Update:
Thursday May 9, 2019
I will update again at the end of the day.
Pre-Open market analysis
Yesterday was a weak follow-through day for the bulls. On Tuesday, they had a strong reversal up after a dip below the March high. But yesterday’s rally had a lot of trading range price action. There was a late selloff that tested the open and the day closed in its middle third.
Yesterday was a bull inside bar on the daily chart after a 5 day pullback in a strong bull trend. It is therefore a buy signal bar for today. However, it was a doji bar. Furthermore, the 5 day selloff has been in a tight bear channel. In addition, the big gap above the March 29 high is a strong magnet below. Consequently, the Emini still might drift lower for a week or two more.
Since yesterday was an inside bar in an early bear trend, it is a sell signal bar for today. But, it had a bull body. That means there might be more buyers than sellers below yesterday’s low. It is therefore a weak sell setup.
The bulls are eager to get a new all-time high. While they probably will get it, it might not come for several more weeks. The unclear price action of the past week makes more sideways to down trading likely. After the extreme 2019 rally, the pullback could last a month or more.
Trump might increase Chinese tariff’s tonight. His decision could create a big gap up or down tomorrow. If he makes an announcement during trading today, it could lead to a huge breakout or a breakout and a reversal.
Overnight Emini Globex trading
The Emini is down 22 points in the Globex session. It therefore will probably gap down. A big gap has an increased chance of leading to a trend. If there is a trend, down is slightly more likely.
However, there is a strong trend from the open only 20% of the time. Most big gaps result in trading ranges for the 1st hour or so. Day trading bulls look for a double bottom or wedge bottom and then a swing up. The bears look for the Emini to go sideways to up to the EMA. Then then look for a double top or a wedge top and a swing down.
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 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 is in a triangle in a yearlong bear channel. This is a Breakout Mode pattern. That means the odds of a successful bull breakout are the same as for a bear breakout. Furthermore, there is a 50% chance that the 1st breakout will fail.
Finally, over the past year, all legs up and down reversed after 2 – 3 weeks. Consequently, the breakout will probably last a couple weeks and then reverse for a couple weeks.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been in a 30 pip range overnight. Also, each of the past 6 days have mostly overlapped one another. Traders have been buying reversals up from around the prior day’s low and selling reversals down from the prior day’s high. This is unsustainable and traders therefore expect a breakout within a few days. Until then, they will continue to scalp reversals.
Trump might announce further China tariffs tonight. This could be the catalyst for a breakout or failed breakout up or down. In addition, he might make an announcement at any point today. If there is a strong breakout lasting several bars on the 5 minute chart, traders will enter in the direction of the breakout and hold for a swing trade. But, if there is a strong reversal, they will swing trade in the opposite direction.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
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 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 sold off and closed the gap above the March 29 high today. It then reversed up strongly from a lower low major trend reversal to above yesterday’s low. Today is therefore now a buy signal bar on the daily chart. However, any announcement about Chinese tariffs tonight will override any chart pattern. There is an increased chance of a big gap up or down tomorrow.
So far, the 6 day selloff lacked consecutive big bear bars. Also, it is a one bar pullback on a very strong weekly chart. Therefore, this might be the bottom.
However, the 6 day bear channel is tight and there are other targets below. In addition, after a buy climax and a perfect double top with the all-time high, there is an increased chance that the selloff could last 2 – 3 weeks. Consequently, there is confusion. Confusion typically leads to a trading range. Even though the Emini will probably get a new all-time high in May or June, it is more likely to go sideways for at least another week first.
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.
Just incredible……Great trader,Great teacher….