Emini and Forex Trading Update:
Thursday January 23, 2020
I will update again at the end of the day.
Pre-Open market analysis
The Emini made another new high yesterday, but it sold off after the 1st hour. Yesterday is a sell signal bar for today. It formed a Low 2 top with Friday.
As I wrote over the weekend, traders should expect a 5% correction to begin within a few weeks. This is a good location for bulls who are trading the daily and weekly charts to take some profits.
Was yesterday the start of the correction? It is too early to tell. But there is an increased risk of one or more big bear days coming soon. Once traders see them, many will take profits and more bears will sell, expecting a 2 – 3 week pullback.
Overnight Emini Globex trading
The Emini is down 2 points in the Globex session. Because of the buy climax on the daily and weekly charts and the sell signal bar yesterday, there is an increased risk of a bear trend day today.
However, I wrote over the weekend that this week would most likely form a pause bar on the weekly chart. That means a smaller bar that might close near the open.
Today is probably going to open near the open of the week. That could be a magnet for the remainder of the week. If so, both today and tomorrow would then probably oscillate around it. There is an increased chance of trading range price action through tomorrow’s close. Also, the week will probably close either a little bit above or below its open and form a small doji bar on the weekly chart.
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 in a trading range for 6 months. Over the past month, there is both a double bottom and a head and shoulders top. This is a Breakout Mode pattern. However, when there is a trading range, breakouts usually do not go far. Consequently, traders look for reversals every few weeks.
Yesterday was a buy signal bar for a micro double bottom with Friday’s low and a double bottom with the December 20 low. However, it was a small bar. There is not a violent rejection of the current price for being too low. Also, there are other magnets just below. While traders have been looking for reversals every few weeks, they are not convinced that this 4 week selloff has adequately tested the nearby support of the December 6 low.
Today so far went 1 pip above yesterday’s high. That triggered the buy signal on the daily chart. But instead of racing up, the EURUSD pulled back.
This is not how a strong buy signal typically behaves. There were as many sellers as buyers above the buy signal bar. Traders are still waiting for more information before concluding that the 4 week selloff has ended or if it will continue down to the December 6 low or November low.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market has had 4 small sideways days. Traders have been buying below the low of the prior day and selling above the prior day’s high. They need more information before swing trading again. Day traders want to see a 30 – 50 pip strong rally or selloff. Without that, they will continue to look to scalp reversals on the 5 minute chart for 10 pips.
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
The Emini sold off on the open, but the sell climax was the low of the day. The day rallied for the rest of the day and closed near its high. Today is a High 1 bull flag buy signal bar for tomorrow.
I said that the Emini would probably stay around the open of the week through tomorrow’s close. Despite the rally, the Emini is still close enough to the open of the week for it to be a magnet tomorrow.
However, over the weekend, I wrote that this week would probably form a pause bar on the weekly chart. That is still true. Therefore the open of the week might be a magnet again tomorrow, especially in the final hour. That reduces the chance of a big bull trend day 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.
