Emini and Forex Trading Update:
Tuesday April 16, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini sold off again yesterday on the open. The bulls bought the selloff, just as they have done for more days over the past 3 weeks.
The most interesting thing right now is the 60 minute chart. It has been in a Small Pullback Bull Trend for 3 weeks. That is a lot of bars. A bull channel typically eventually converts into a trading range. This one should this week.
A reasonable goal for the bears is a pullback that is about twice as big as the biggest one in the bull channel. Consequently, the Emini will probably begin about a 50 point pullback sometime this week.
It probably will not begin until after testing the measured move target around 2920 based on Friday’s gap.
Overnight Emini Globex trading
I have been saying in the chat room that Friday’s gap up was a likely measuring gap on the 60 minute chart. I said that the target was around 2920. Today is up 10 points in the Globex session, which puts it at that target.
I have also been saying that the 60 minute chart has been in a tight bull channel for about 100 bars. That is a long time and therefore a buy climax. Typically, there is a break below the bull channel and a pullback that falls about twice as far as the biggest pullback in the channel. If that pullback was to begin today, it would probably test last week’s 2877.25 low within a couple weeks.
A big gap up has only a 20% chance of leading to a strong trend from the open that lasts all day. Much more likely is a trading range for the 1st hour. The bears want a wedge top or double top and then a swing down. However, the bulls will look for a reversal up from a selloff to the EMA. They expect either a double bottom or wedge bull flag there.
EURUSD Forex market trading strategies
The EURUSD daily Forex chart has been sideways for 3 days after a 2 week rally. The rally is a weak bull channel. Since it has 3 legs up after a strong selloff, it is also a wedge bear flag.
But, this bull channel is tight and yesterday was a doji. That is a weak sell signal bar in a rally that is not climactic. Traders do not yet believe that the rally is overdone.
The weak rally back to the middle of the 5 month range is a sign that traders think that the price is fair for the bulls and bears. There is no sense that the price is terribly wrong and that the market has to move quickly to a more accurate price.
Traders are deciding if this rally is a wedge bear flag or a leg that will continue up to the top of the range. Because the chart has been sideways for 3 days, traders have not yet made up their mind. They want to see a better buy or sell signal bar, or a strong breakout up or down. In the meantime, the odds favor more quiet trading today.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been in a 30 pip range overnight. It reversed up from below yesterday’s low. Yesterday was a sell signal bar for a 2 week wedge bear flag. But, it was a doji bar and not a strong sell signal bar. In addition, the 2 week rally has been in a tight bull channel. A weak sell setup like this is more likely to have more buyers than sellers below the sell signal bar. So far, that has been the case.
The fight today will be over the close. If the bears can close the day on its low, today would be a good entry bar. This is despite the weak sell signal bar yesterday. That would increase the chance of at least slightly lower prices tomorrow.
Alternatively, if the bulls can close the day on its high and at least 20 pips above the open, today will be a good buy signal bar for tomorrow. That would increase the chance of higher prices over the next couple days.
What is most likely? Confusion. The price is in the middle of a 5 month trading range and the daily chart has been sideways for 3 days. Most days over the past 3 weeks have had prominent tails. These are signs of a lack of conviction. Therefore, that will probably continue today.
Traders will sell rallies and prevent a strong buy signal bar on the daily chart. In addition, they will buy selloffs and prevent a strong entry bar after yesterday’s sell signal. In a balanced market, traders buy low, sell high, and take quick profits.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
The Emini gapped up to the measured move target on the 60 minute chart and sold off. It spend most of the day in a tight trading range. The bears got trend resumption down at the end of the day.
Since there were 3 pushes up over the past 7 days, there is a small wedge top on the daily chart. In addition, because today was a bear day, it is a sell signal bar for tomorrow. However, the late rally weaken the sell signal. The bulls might get one more high before the pullback begins.
The 3 week bull channel has been tight. Therefore, the 1st reversal down will probably be minor. The best the bear can probably get is a 50 point pullback over the next week to around last week’s low and the 20 day EMA.
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 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.
Hi Al, given today’s context if you sold the big stc bear bar near the eod, when you see the bull reversal bar are you going flat above that bar?
Yes. Traders had to exit shorts. They could also have bought for a swing up because it was a 2nd leg bear trap in a trading range day.