Trading Update: Friday November 19, 2021
Emini pre-open market analysis
Emini daily chart
- Yesterday was an outside up day, which is bullish. Emini bulls want to test bull channel top on weekly chart at 4775.
- It barely closed back above the 4700 Big Round Number and just below the all-time high, which is disappointing for the bulls.
- After 4 sideways days at resistance, there should be a breakout up or down soon.
- The bulls want a close above the November 5 all-time high.
- If the week closes near the high of the week, that would increase the chance of a gap up on the weekly chart next week.
- It would also increase the chance that the Emini will test bull channel top of the weekly bull channel, which will be around 4775 next week.
- If the week closes near the low, there will be a micro double top on the weekly chart, which would increase the chance of lower prices next week.
- Today is Friday and weekly support and resistance can be important, especially in the final hour.
- The bulls want the week to close at a new high. Therefore, the November 5 high of 4711.75 is a magnet.
- The bears want the week to close below that high and below last week’s high.
- They also want the week to close below the open of the week. This week would then have a bear body, which would increase the chance of sideways to down trading next week.
Emini 5-minute chart and what to expect today
- Emini is down 2 points in the overnight Globex session. It should open near the middle of yesterday’s trading range. It therefore might continue sideways, as it has been doing for 4 days.
- However, the Emini has been in a tight bull channel for 7 days on the 60-minute chart. A bull channel is a bear flag since there is a 75% chance of a break below the channel and then a swing sideways to down.
- There have been swings up and down during most recent days. Traders are deciding if the rally will break strongly above the all-time high and reach the top of the weekly channel, or reverse down from a double top with the November 5 high.
- In either case, there can be a strong trend. If there is a series of strong trend bars in the 1st hour in either direction, traders will look for a trend day.
- But if there is hesitation and reversals, they will expect at least one swing up and one swing down today.
Yesterday’s Emini setups
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- Today so far is a big bear day and it broke to a new 17-month low.
- The bears want the sell climax to continue, but it is extreme and it should begin to attract profit takers.
- A extreme sell climax that has a brief reversal, like over the past two days, often has a 1- to 3-day final leg down before exhausted bears begin to take some profits.
- That is what will probably happen here.
- There might be more buyers than sellers below Wednesday’s low. If so, the extreme selling should convert into a trading range over the next couple of weeks.
- With the selling being extreme on the weekly and monthly charts, once there is a trading range, it could last several months.
- Traders should decide over the next week if its time to take some profits. It probably is.
- A reasonable minimum goal when there is profit taking is at least a couple legs of sideways to up lasting about 10 days.
- Since 2 legs is the minimum, traders will buy the first 1- to 3-day selloff after the 1st rally from the bottom.
- The first target for a reversal up after a sell climax is the most recent lower high.
- If there is a reversal next week, there will be a double bottom. Yesterday’s high would be the neckline. The bulls will try to get a measured move up and the bears will try to get another leg down from a double top.
- If the rally is weak, the selloff will continue down to the June 19, 2020 low of 1.1168.
- If the bulls get several bull bars closing near their high, this reversal could be the start of a 1- to 2-month rally.
- Remember, the EURUSD has been in a trading range for 7 years. There is no reason yet to expect a breakout of the range.
- Therefore, as strong as the 2021 bear trend has been, it is still only a bear leg in a trading range. Traders should expect a bull leg at some point.
- There is no credible bottom yet, but a reversal up is more likely than a breakout below the bottom of the 7-year range.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
- Trading range open and trading range day.
- The Breakout above the opening trading range and above the November 5 all-time high failed.
- Reversed down from a wedge top and a midday trend reversal.
- Broke to a new low but reversed up from just below the open of the week.
- It then entered a smaller trading range for the final 30 bars within the trading range day.
- On the daily chart, the bears want a reversal down from a higher high double top with the November 5 high.
- Today was a bear bar closing near its low and therefore a good sell signal bar.
- However, the bull trend is strong and the odds are that any reversal will be minor, like all of the other reversals since the pandemic low.
- Bulls want rally to continue up to top of weekly channel at around 4775.
- Small bull body on weekly chart so this week was not strongly bullish.
- Traders expect higher prices and will buy 1- to 3-day pullbacks until there is a strong reversal down.
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 Time
When I mention time, it is USA Pacific Time. The Emini day session charts begin at 6:30 am PT and end at 1:15 pm PT which is 15 minutes after the NYSE closes. You can read background information on the market reports on the Market Update page.
Hello Al, Namaste.
First of all thank you for this course, it has changed by view of markets forever.
1) Could you please tell me how are range charts different compared to Candle stick charts?
2) Does price action patterns, trend lines etc work on range charts?
3)Are they better than candle stick charts?
4) how to decide on range of a particular stock or index?is there any formula?
Please clear my doubt, thanks in advance.
I have answered this question many times over the years. A price chart (candlestick, bar, or line) has 2 variables, price and time. Both are useful to traders.
A range chart only shows price, even though it is 2-dimensional. Patterns work, but trend lines are not as accurate. It is also easier to see momentum on price charts.
However, if a trader is making money with range charts and is happy, there is no reason for him to change. I think it is easier to make money using conventional price charts.
Thanks for clarifying my doubts Al.