Emini and Forex Trading Update:
Thursday November 19, 2020
I will update again at the end of the day.
Pre-Open market analysis
The Emini formed a big bear trend day yesterday after a 5-day rally. The bears expected at least a small 2nd leg sideways to down after last week’s big bear day. Yesterday might be the start of that 2nd leg down.
The bulls hope that yesterday was just a pullback in the 5-day rally. But the range was big, it formed an Emini double top with last week’s high, and it closed back below the September high. These factors increase the chance of some follow-through selling today, or at least sideways trading.
I have mentioned several times that the Emini has not been behaving well around the September high. Several days that traded above it closed below it. That is not typically how successful breakouts behave. The bulls might need a double bottom with last week’s low before they can try again to break strongly above the September high.
Emini Monthly chart has a problem
Can the Emini go far above the September high? If you have been reading my weekend blogs, you would know that I think the monthly chart is a problem for the bulls. Last month was a High 1 buy signal bar, but it had a bear body. In addition, it was a 2nd consecutive bear bar on the monthly chart. I said that the rally might last a month or two, but traders should expect sideways to down trading for many months, possibly for the entire 1st half of next year.
Also, the yearly chart is a problem as well. I will show it again at the end of the year. This year is a big outside bar on the yearly chart and it is coming late in a bull trend. That is a sign of exhaustion and balance, and it reduces the chance of much higher prices next year.
Overnight Emini Globex trading
The Emini is down 9 points in the Globex session. Since yesterday was a strong bear trend day, there should be exhausted bears today. There is a 50% chance of strong follow-through selling on the open, but a 75% chance of at least a couple hours of sideways to up trading that starts by the end of the 2nd hour. Traders know that there is only a 25% chance of another strong bear trend day today.
Today might gap down, but if it does, the gap will probably be small. Small gaps typically close in the 1st hour and are not important.
Remember, traders will look for an early trading range today. If they get it, the bears will want trend resumption down later in the day to around 3500, and last week’s low. The bulls will want trend reversal to 3600, which is the top of the sell climax at the end of yesterday and at the EMA on the 60-minute chart.
Also, at a minimum, the bulls want to get back above the September high of 3576.75, which has been an important magnet. If today does not collapse on the open, the Emini should test that level at some point today.
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 is in a 2-week trading range at the top of a 4-month trading range. The bulls see these 2 weeks as a bull flag and want a breakout above the September 1 high. The bears want a reversal down from a double top with the September 10 high or the September 1 top of the 4-month range.
Everyone knows that there will be a breakout above or below the 4-month range at some point, but look at the chart. There have been many strong legs up and down, and each has reversed. Traders look to sell reversals down from the top and buy reversals up from the low.
We do not know if the November 19 high is high enough up for the bears to sell aggressively. The past 2 sideways weeks mean that traders are deciding if the November 9 high will be the start of a swing down or if the EURUSD will go up to the top of the 4-month range.
Since yesterday was a small sell signal bar and it followed 4 bull days, this is not a strong top. That means it is still slightly more likely that the EURUSD will go sideways more, or test up to the September 1 high. But a couple big bear days will flip the odds in favor of a breakout below the November 11 low and a test of the bottom of the range.
The bars have been small and the tails have been prominent for several days. That means traders think the price is just about right, and it increases the chance of another small day today.
Overnight EURUSD Forex trading
The EURUSD Forex market broke below yesterday’s low overnight. This triggered a minor sell signal on the daily chart.
While the EURUSD has traded down on the 5-minute chart overnight, it has been mostly sideways. There was a trading range, a brief bear breakout, and then a lower range. This is a Bear Trending Trading Range Day, which is a weak type of bear trend.
The emphasis is on the words “Trading Range.” Day traders are looking for reversals and small profits. While it is possible for any day to suddenly become a strong trend day, traders are currently betting against it and taking scalps up and down.
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
As I said was likely after yesterday’s sell climax, the Emini entered a trading range today after a brief reversal up from a sell climax on the open. My minimum expectation was at least 2 hours, and this one lasted 3 hours. The bulls got late trend resumption up to the September high.
Because today reversed up from a test of the October 12 breakout point and today had a bull body, it is a buy signal bar for tomorrow. Tomorrow will probably trade above today’s high and trigger the buy signal. The target above is the start of yesterday’s sell climax, which is around 3600.
Tomorrow is Friday so weekly support and resistance can be important, especially in the final hour. The bulls want the week to close above the September high and the open of the week. That would increase the chance of higher prices next week.
The bears want the week to close on the low of the week and below the October 12 high, which was the breakout point for the rally 2 weeks ago. However, with today’s reversal up from that support, tomorrow will probably not reverse back strongly down. Traders expect sideways to up tomorrow.
If the week remains an inside bar tomorrow, this week will be both a buy and sell signal bar 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.
