Emini buy climax and final trading day in March
I will update again at the end of the day.
Pre-Open market analysis
The Emini formed an inside day yesterday. But, it closed near the high and there is a micro double bottom on the daily chart. Yesterday is therefore a buy signal bar for today.
Today is the last day of the week, month, and quarter. The close of the weekly and monthly candlesticks is unusually important. Since the bears had a sell signal on the weekly chart last week, they want a strong entry bar this week. The bulls instead want the week to close near its high so that it will be a High 1 bull flag for next week.
The monthly chart had bull bars in January and February. They want March to be the 3rd consecutive bull bar. However, if today closes around the open of the month, this month’s candlestick will be a doji bar. That would be neutral, and it would increase the chance of a test of the March low. A bear body would further increase the odds. That low is about 100 points below.
The Emini has been sideways for 4 days around the open of the month and the low of last week. That tells traders that those prices are important. Consequently, they will be magnets today, especially in the final hour.
Overnight Emini Globex trading
The Emini is up 12 points in the Globex session. There is a 2 day micro double bottom on the daily chart, and yesterday was a decent buy signal bar. Yesterday’s rally was a potential start of a reversal up.
Today might gap above yesterday’s high. That would trigger a buy signal on the daily chart. Consequently, there is an increased chance of a bull trend day today.
However, the rally might stall around Tuesday’s lower high. If so, the daily chart would have a small double top in addition to this week’s micro double bottom. Traders are still deciding whether last week’s high was the high for the next 2 months or if the rally will continue up to a new all-time high.
Since yesterday was a buy climax, there is a 70% chance of at least 2 hours of sideways to down trading at some point today. Because yesterday’s buy climax lasted only half a day, the bulls might not yet be exhausted. That means the rally could continue for 2 or more hours and test Tuesday’s high before the bulls will begin to take profits. Since the Emini yesterday ended with a strong bull trend and there is room to the next resistance above, there is an increased chance of an early rally.
However, today is the last day of the week, month, and quarter. Consequently, traders have to be ready for either a strong rally or reversal down in the final hour.
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. 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 has sold for 7 days off from a breakout above the February 28 high. There was an initial 2 day bear spike and then a 5 day tight bear channel. A bear Spike and Channel is a sell climax. Traders should expect a bounce over the next week.
The bulls want the selloff to be simply a deep pullback from their breakout. However, the bears hope that the March 20 high formed a double top with the February 28 high. They then want a strong break below the March 7 low and a 250 pip measured move down.
Trading ranges constantly form double tops and bottoms and wedge tops and bottoms. There is always both a reasonable buy and sell setup.
But, as strong as the legs up and down are, the odds favor reversals. Until there is a bull or bear breakout with consecutive closes beyond the range, traders will continue to bet on reversals.
Traders are waiting for Brexit information. It can come at anytime. That is a potential catalyst for the next trend. In the meantime, they will continue to look for reversals.
Since the current selloff has lasted 2 weeks and is now at the bottom of the range, a rally will probably start next week. But, a surprise from Brexit could instead lead to a huge bear breakout. The probability still favors reversals.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart sold off to below yesterday’s low in the European session, but reversed up 40 pips over the past 2 hours. Since the location on the daily chart is good for the bulls, there is an increased chance of a bull trend day today. Day traders will look to buy pullbacks. If there is a very strong bull breakout, they will buy at the market as well.
Since most days have been predominantly sideways, the bulls will probably scalp for 10 – 20 pips. However, if there is a sustained big breakout, they will swing trade.
Because almost every day has had a lot of trading range price action, the bears will look to scalp reversals down from around the prior intraday high. While a 40 pip rally is not major, it is enough to make a bear trend unlikely today. Therefore, it will probably be easier to make money today looking to buy pullbacks that selling rallies.
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. 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 for a few bars after a big gap up. It then entered a tight trading range. After a brief bull breakout at the end of the day, it pulled back to close near to test the open. It closed near the open and high, and today was a bull doji day.
On the monthly chart, March was a bull doji bar. This is more neutral than the prior 2 months.
The week closed near its high. Therefore, this week is a buy signal bar for next week. However, the buy climaxes on the daily and weekly chart make a 2 month sideways to down pullback more likely than a continued rally to new all-time high.
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.
sorry to bother you guys here. I remember Al has a video presentation specifically about trading Gaps. (not the course content but..I think should be one of his conference talk record). I could not find it in his blog. Can anyone help me with the link? thank you!