Emini and Forex Trading Update:
Wednesday November 27, 2019
I will update again at the end of the day.
Pre-Open market analysis
Yesterday had a weak rally for the 1st half of the day and then a reversal down. The selloff was a test of the open and the bulls bought it. That trend resumption up increase the chance of higher prices through the end of the month on Friday.
The daily chart is in a Small Pullback Bull Trend and therefore the odds are against a big move down. However, there will probably be a 100 point pullback beginning soon. The bulls might have to test the top of the monthly channel first, which is just below 3170.
It is important to consider the possibility that 2019 ends in the opposite way of 2018. Last year finished with a huge sell climax and then a big reversal up. Traders have to consider the possibility of this year ending with a blow-off top and then a surprisingly big reversal down.
Will today be a big bear day? Unlikely. Most days over the past several weeks have had at least one reversal and lots of trading range trading. Until that clearly ends, day traders will continue to take profits after 2 – 4 hours and look for reversals. Because tomorrow is a holiday, today could spend a lot of time in tight trading ranges.
Overnight Emini Globex trading
The Emini is up 4 points in the Globex session. There might therefore be a small gap up today. Small gaps typically close in the 1st hour.
Because the 60 minute chart’s rally over the past 3 days is extreme, there is an increased chance of a pause or a reversal down today. However, the bull trend on the daily and weekly charts is strong. Traders have been buying every 1 – 3 day pullback for 2 months. Consequently, there is not much downside risk over the next few days.
While the rally has been strong, most days have had at least one reversal. Day traders will expect that again today. Additionally, since tomorrow is a holiday, there is an increased chance of today spending a lot of time within a tight trading range. Finally, even if there is a tight range, day traders should be ready for a possible strong but brief breakout up or 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. 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.
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 daily chart of the EURUSD Forex market has been sideways in a tight range for 3 days. Over the past month, there was a double top and the bulls are now trying to create a double bottom. Additionally, they want today to form a micro double bottom with Monday’s low. A reversal up from here would create a higher low major trend reversal buy setup. Also, there would be a head and shoulders bottom.
Since there was a big nested wedge bottom reversal up in October, traders expect a 2nd leg up after the October rally. What they do not know the level where it will begin. The bulls want a good buy signal bar within a week. If they get it, traders will assume that the higher low bottom is probably about to reverse up.
If they are unable to get a reversal up within a week, that would indicate that there are not enough bulls at this price. The EURUSD would then probably have to fall to the next support level to find buyers. That is the October low.
Even if it were to fall below that low, traders would expect a reversal up. This is because the weekly chart has been in a bear channel for 2 years. Every new low reversed up within a couple weeks. There is no sign that this pattern is about to change.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market trade below yesterday’s low last night, but bounced. Yesterday was a bull day on the daily chart and therefore a weak Low 1 sell signal bar. There were therefore more likely to be more buyers than sellers below its low.
The overnight range has only been 21 pips. Furthermore, the range over the past 5 hours has only been 10 pips. That makes it difficult even for scalpers to trade profitably. Day traders will look for reversals to scalp. But with 3 small days and tomorrow being a US holiday, there might not be many profitable day trades today.
The odds of a trend today are less than usual. However, if there is a strong breakout up or down, day traders should be ready to swing trade it.
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. 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.
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
After a trading range open, the Emini rallied in a Small Pullback Bull Trend. There is still room to the top of the bull channels on the daily and monthly charts. The Emini should reach both in December.
Friday has an early close and it is rarely worth trading. Traders should wait for next week.
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.
