Emini and Forex Trading Update:
Tuesday November 24, 2020
I will update again at the end of the day.
Pre-Open market analysis
By trading above Friday’s high yesterday, the Emini triggered a buy signal for a reversal up from the bottom of a 3-week trading range. But since Friday was a big bear bar, there were likely to be more sellers than buyers above its high, and there were.
The Emini sold off yesterday, tested Friday’s low, and then reversed up to close near the open of the day. Most days for 3 weeks have closed near the open or in the middle of the day’s range, and both are signs of neutrality. The Emini also closed near the September high, which has been the most important magnet for 3 weeks.
The bulls are hoping that today will continue yesterday’s rally. The bulls see the 3-week trading range as a double bottom. The bears, however, see it as a double top, and want a break below the range.
The 3-week trading range is a Breakout Mode pattern. There is a generally a 50% chance of a successful bull or bear breakout, and there is no evidence that a breakout is imminent. But since the trading range came after a strong rally, the probability is slightly better than 50% for the bulls.
It is important to note that most days over the past 3 weeks have had at least one reversal on the 5-minute chart. Day traders will continue to look for intraday reversals until there are several strong consecutive bars up or down on the 5-minute chart.
Overnight Emini Globex trading
The Emini is up 28 points in the Globex session. Today will probably gap above yesterday’s high, the September high, and the 3600 Big Round Number. The bulls want to break above last week’s high, which would trigger a High 1 bull flag buy signal on the weekly chart.
Today will also open with a big gap up from yesterday’s close on the 5-minute chart. The Emini will then be far above the EMA, which is a measure of the average price. When a market is far above the average price, traders will only buy if the bars look far more bullish than average.
Most of the time, the bars are not strong enough. The result is that the legs up and down do not get far. The Emini usually enters a trading range for the 1st hour or two until the EMA rises to the bars.
Because of the likely early trading range, day traders will look to sell a double top or wedge rally for a selloff down to the EMA. Once the Emini is near the EMA, they will look for a double bottom or wedge bottom for a swing up.
About 20% of the time, the Emini forms a trend bar right from the early bars, and the trend lasts all day. But an early trading range is more common.
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. Buyers of both the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).
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.
If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.
EURUSD Forex market trading strategies
The EURUSD Forex market on the daily chart so far today has a high below yesterday’s high and a low above yesterday’s low. It is an inside day after an outside day, and there is now an ioi (inside-outside-inside) Breakout Mode pattern. It follows a small breakout above and below a 2-week triangle. Additionally, that followed a 4-week expanding triangle. All of it is within a 4-month trading range, and everything is a Breakout Mode pattern.
Traders know that there will eventually be a successful breakout in either direction, but they also know that reversals are more likely than breakouts when the market is sideways. Consequently, they are unwilling to hold onto positions for more than a few days. Once there are consecutive closes above or below the 4-month range, they then will hold part of their position for what they hope will be a 400-pip measured move, based on the height of the trading range.
Overnight EURUSD Forex trading
The 5-minute chart of the EURUSD Forex market opened in the middle of yesterday’s range, rallied slightly, and pulled back. The rally was a test of yesterday’s sell climax high on the 5-minute chart. Once it got there, it pulled back, which usually happens when a market tests a sell climax high.
Today’s range has been small, and today so far is an inside day. Traders might be betting that today will remain an inside day. There would then be an ioi pattern on the daily chart, and swing traders would try for a trend day up or down tomorrow. So far today, day traders have been scalping for 10 to 20 pips.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
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. Buyers of both the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).
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.
If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.
End of day summary
The Emini gapped up and rallied from a High 2 bull flag. The rally was a Small Pullback Bull Trend, but it was climactic and profit-takers came in just above last week’s high. Remember, last week was a High 1 buy signal bar on the weekly chart, but I have been saying that it was a weak buy setup because last week and the week before were bear bars.
It is common for a Bull Trend From The Open to get exhausted after a couple hours and then enter a tight trading range. Today was an example. Then, tomorrow, traders decide whether to resume the trend or create a reversal down. The momentum up is strong enough to make a new high more likely.
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.
