Emini and Forex Trading Update:
Monday August 10, 2020
I will update again at the end of the day.
Pre-Open market analysis
The Emini closed on its high on Friday. Three of the past 5 weeks gapped up on Monday. The bulls want another gap on the weekly chart again today. There is a small chance of a big gap up to a new all-time high today.
Friday was the 8th consecutive bull bar on the daily chart. That is unusual. The last time that happened was on June 5. The Emini sold off 9% over the next 5 days. While that is possible again, it is more likely that the bulls will buy the 1st 1 – 3 day pullback. Traders expect a new all-time high this week.
The bears want a double top with the February high and then a reversal down. But with the bull trend as strong as it has been, the Emini will probably have to enter a trading range for a couple weeks before the bears can correct down to below 3,000.
Overnight Emini Globex trading
The Emini is up 3 points in the Globex session. It might gap above last week’s high. But small gaps typically close in the 1st hour.
Furthermore, after 8 consecutive bull days on the daily chart, day traders expect a bear day today or tomorrow. Buy climaxes sometimes have one final surge before the profit taking begins. While the bulls might get a huge rally to above the all-time high today, it is more likely that they are getting exhausted. This reduces the chance of a big bull day. Traders are probably looking to sell rallies as they take profits or begin to look to short for a 1 – 3 day pullback.
Additionally, while the all-time high is an important magnet and within reach today, all magnets are resistance. That further reduces the chance of a big bull day today.
Can today be a big bear day? After 8 bull days, traders are expecting profit taking for at least a day or two. It could be from a big bear day.
Friday had several legs up and down. There will probably be at least one leg up and one leg down again today.
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. I do not want the lines to be distracting. If they are longer, I make them dotted. But, they have to be visible, so I make the shorter ones solid. 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 (see Online Course/BTC Daily Setups).
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.
If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.
EURUSD Forex market trading strategies
The EURUSD Forex market on the daily chart has been sideways for 3 weeks. It rallied in a nested wedge buy climax to test the September 2018 high and the 1.20 Big Round Number.
Traders are now deciding if the final 3 week buy climax was simply a buy vacuum test of resistance or the start of a bull trend. It is probably both.
Because of the extreme buy climax, I have been saying that the bulls would take profits. The minimum profit taking should be a couple legs of sideways to down trading to around the EMA.
More profit taking likely
What has happened over the past 2 weeks has met the minimum. Will the bulls buy again and break above 1.20, or will the profit taking continue for a couple more weeks and reach support at the March 9 high breakout point? Since the profit taking has only met the minimum expectation, it will probably continue for another week or more.
If a bull trend resumes after only minimum profit taking, the rally usually does not get too far before there is more profit taking. Therefore a rally to a new high from here would make the past 2 weeks a likely Final Bull Flag.
There has not been sustained strong trading up or down for a couple weeks. This trading range price action will probably continue for at least a few more days.
Despite 2 weeks of sideways trading, there has been only a single 3 day pullback from the high. There should be at least one more small leg sideways to down. Traders will sell above today’s high.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market rallied early overnight and then sold off to below yesterday’s low. The selloff was in a wedge bear channel. That typically evolves into a trading range The bounce over the past hour is the start of that process.
Today will probably remain a trading range day. The bulls want today to close above the open. It would then be a High 1 bull flag buy signal bar for tomorrow.
But since a 2nd leg down is likely, there will likely be sellers above today’s high. Consequently, today will probably not close far above the open and be a strong buy signal bar.
Day traders expect the EURUSD to go sideways around yesterday’s low and the open of the day for the remainder of the day. They plan to scalp up and down for 10 – 20 pips. There is always a possible trend, but with the EURUSD in a trading range for now 3 weeks and 2 big reversals so far today, a trading range day is more likely.
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. I do not want the lines to be distracting. If they are longer, I make them dotted. But, they have to be visible, so I make the shorter ones solid. 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 (see Online Course/BTC Daily Setups).
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.
If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.
End of day summary
This was the 4th week in the past 6 weeks where the Emini gapped up on the weekly chart. The gap was small and it closed, as was typical.
After a sell climax down to the 60 minute EMA, the Emini reversed up sharply to the open of the day. It went sideways from there.
Since today closed above the open, today was 9th consecutive bull day on the daily chart. This has not happened in over 2 years. Rare events are unsustainable and therefore climactic. There is an 70% chance that tomorrow will close below the open. Traders will look to sell a reversal down from above the open late in the day.
The Emini might pull back for a day or two, but traders expect a new all-time high soon. Today’s close was about 20 points below the all-time high. It is certainly within reach tomorrow.
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 Market Update page.
