Emini and Forex Trading Update:
Friday September 18, 2020
I will update again at the end of the day.
Pre-Open market analysis
By trading below Wednesday’s low yesterday, the Emini triggered a double top bear flag sell signal. But it reversed up from the 50 day MA, and yesterday is now a buy signal bar for today for a double bottom bull flag. It is still in its 2 week trading range, which is a Breakout Mode pattern.
The bulls see the 2 week trading range as a bull flag at the 50 day MA in a 5 month bull trend. But the bears see it as a bear flag in a bear trend that began on September 2.
Traders are deciding if the 50 day MA will hold. If it does, there could be a rally to 3500 before the selloff continues down to 3000 – 3200. However, the Emini should reach that downside target before there is a new high.
Today is the last day of the week. The bears want the week to close on its low. It would then be a Low 1 sell signal bar for next week.
Also, they would like a break below last week’s low today. This week would then be an outside down candlestick on the weekly chart. That would increase the chance of lower prices next week.
Finally, the bears want September to trade below the August low. It would then be on outside down bar on the monthly chart as well. That would increase the chance of lower prices in October.
Overnight Emini Globex trading
The Emini is up 6 points in the Globex session. It is trading in the middle of its 2 week range. Traders are wondering if it will reverse up from the 50 day MA or break below.
The bulls want to trigger the buy signal on the daily chart by going above yesterday’s high. However, yesterday has a prominent tail on top and the Emini is in the middle of a 2 week range. That lowers the chance of a big bull trend day.
Yesterday reversed up 3 times from the 50 day MA. That lowers the probability of a big bear trend day.
Traders could be exhausted by this week’s reversals in the 2 week range. They might decide to continue yesterday’s trading range trading today and wait for next week to decide on the direction of the breakout of the 2 week range. Even if today is a trading range day, the recent daily ranges have been big. There will therefore probably be at least one swing trade up and one swing trade down.
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. I do not want the lines to be distracting. If they are longer, I make them dotted. But, they have to be visible, so I make the shorter ones solid. 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 has been in a tight trading range for 7 weeks. It is therefore in Breakout Mode. That means that the chance of a successful bull breakout is about the same as for a bear breakout.
Every trading range has both a buy and sell signal. The bears have a head and shoulders top over the past 5 weeks. Yesterday fell below the neckline and triggered the bear breakout. But, yesterday reversed up and is a buy signal bar for a double bottom with last week’s low.
Until there is a breakout, traders will keep looking for reversals every few days. Also, they will take quick profits. That perpetuates the trading range.
Today went above yesterday’s high and therefore triggered the double bottom buy signal. However, the overnight range has been small. The bears hope that yesterday and today are forming a brief pullback in a bear trend that began with the September 1 high. This is a neutral market with no sign that it is about to convert into a trend up or down.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market overnight traded above yesterday’s high to trigger a double bottom buy signal on the daily chart. However, the breakout was small and the EURUSD immediately pulled back to yesterday’s high. It has been oscillating around yesterday’s high in a small range all day. Day traders are looking for reversals and are scalping.
It is also at the open of the week. Last week closed almost exactly at the open and this created a doji bar on the weekly chart. This week is also a doji bar. That means that the weekly chart has been perfectly neutral for 2 weeks.
If today closes on its low, it would be a sell signal bar for Monday. The bears would see yesterday’s reversal up as a pullback from the break below the neckline of the head and shoulders top on the daily chart. If it closes on its high, the bulls will be hopeful that this is the start of a rally to the top of the range.
But if the range stays small and today closes near the open of the week, today will not have any predictive value for next week. so far, there is no sign that today convert into a trend up or down. But if there are 2 or 3 consecutive big trend bars in either direction, day traders will switch to swing trading.
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. I do not want the lines to be distracting. If they are longer, I make them dotted. But, they have to be visible, so I make the shorter ones solid. 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 sold off from the 1st bar of the day. The bulls tried to get a wedge bottom just above yesterday’s low. They failed and the Emini fell for a measured move down to below 3300 and last week’s low. It reversed up over the last 2 hours from the sell climax.
This week was an outside down week and that reduces the chance of a strong rally next week. Last month’s low is not far below. September might become an outside down month. That would increase the chance of lower prices in October.
I have been saying since August that the Emini should fall to 3000 – 3200. This is still true, but there can be a sharp rally at any time. The bears will sell the 1st 1 – 3 day rally.
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.
Thank you, Al! Your effort is so priceless!