Emini and Forex Trading Update:
Tuesday May 21, 2019
I will update again at the end of the day.
Pre-Open market analysis
Yesterday gapped down, but reversed up in a weak rally on the open. It spent most of the day going sideways to down in a weak bear channel. However, it rallied into the closed. Today was the 5th consecutive bull trend bar on the daily chart.
This is a sign that the correction might have ended. It increases the chance of a strong bull trend day at some point this week and a new high within a few weeks. However, the odds are still slightly higher for a 2nd leg down to close the gap above the February 8 high.
Today will probably have at least one swing up and one swing down, like most recent days. Despite 10 bull bars in the past 12 days, today will probably not be a strong bull trend day.
Breakout Mode
The chart is in the middle of a 2 week trading range. Traders are deciding if the selloff has ended or if it will continue down to fill the gap above the February 8 high.
On the 240 minute chart, there is a head and shoulders bottom. Every head and shoulders bottom also is a double top bear flag. The chart is in Breakout Mode.
When that is the case, there is an increased chance of a big trend day up or down. However, the chart might continue to form another small trading range day or two before the breakout comes.
Overnight Emini Globex trading
The Emini is up 14 points in the Globex session. It therefore might gap above yesterday’s high on the open.
Despite 5 consecutive bull bars on the daily chart, the buy setup on the daily chart is not strong. Yesterday was only a bull doji bar. It is therefore a weak buy signal bar. Consequently, there might be more sellers than buyers above yesterday’s high.
Also, when a chart is in a trading range on the daily chart, 5 consecutive bull bars is unusual. Therefore, if today is another trading range day, the odds are that today will close below its open. If the Emini is above the open in the final hour, day traders will look for a reversal down for a close below the open.
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 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 EURUSD daily Forex chart has been in a bear channel for the past year and in a trading range for several weeks. There is now both a double top and a double bottom. This means that the chart is in Breakout Mode.
Traders believe that the breakout will lead to about a 100 pip measured move up or down. Furthermore, they think that the market is neutral near-term. The probability of the breakout is the same for the bulls and the bears.
However, unless the bulls get a strong break above the March 20 major lower high, the bear trend will still be intact. Consequently, traders believe that every 2 – 3 week rally will reverse down and the selloff will lead to another new low.
There is a wedge bottom on the 240 minute chart. Also, the chart is at the bottom of a 3 week trading range. Trading ranges tend to continue rather than break out. Traders know that the odds favor a bounce within a week.
A reversal up from here would create a double bottom with the May 3 low. Additionally, that double bottom would be a double bottom higher low major trend reversal on the daily chart.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been in a 30 pip range overnight. In addition, today’s range mostly overlapped the range of the past 2 days. Those days were also small, and day traders scalped reversals for 10 pips. They will continue to scalp until there is a strong breakout up or down on the 5 minute chart.
The daily chart is at the bottom of its 3 week range. There is therefore an increased chance of a 100 pip rally toward the top of the range beginning this week.
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 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 gap up, the Emini entered a tight trading range. A tight trading range after a big gap is a good candidate for a Final Bull Flag. There was a brief parabolic wedge rally and a reversal back down to the Final Bull Flag.
While the bulls got another rally, the day was exceptionally quiet. Most bars were within tight trading ranges.
Today was the 6th consecutive bull trend day on the daily chart. That is a sign of buying pressure. It increases the chance that the 3 week correction is over. But, at the moment, there is still a 50% chance of a lower high and a closure of the gap above the February 8 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.
