Emini and Forex Trading Update:
Friday February 14, 2020
I will update again at the end of the day.
Pre-Open market analysis
The Emini formed an outside up day and another new all-time high. However, it sold off to close in the middle of the day’s range.
The bulls hope that the 2 week rally is a resumption of the 4 month bull trend. If they keep getting bull bars closing near their highs, the odds will shift in favor of the rally reaching the weekly chart’s Leg 1 = Leg 2 target at 3468.
However, there is currently an equal chance that it is a bull leg in a trading range than began around Christmas. The bears see the rally as a wedge since the January 29 high. If so, the Emini will test the January low at the bottom of the range by the end of March.
Today is Friday so weekly support and resistance can be important. However, there are no nearby targets. Therefore the fight will be over whether or not the week closes on its high.
Overnight Emini Globex trading
The Emini is up 5 points in the Globex session. It will probably open in or near yesterday’s 5 hour trading range. Since markets tend to continue what they have been doing, there is an increased chance of an early trading range.
If that happens, today would likely be another mostly sideways day. Also, with Monday being a holiday, traders begin to think about waiting for Tuesday before aggressively trading again. That further reduces the chance of a big trend day.
The daily chart is in a buy climax. Traders need to be ready for a Surprise Day up or down at any time.
Most bars on the weekly chart have had conspicuous tails on top. This probably increases the chance of today closing down from this week’s high by 10 or more points.
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.
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 daily chart of the EURUSD Forex market is in a sell climax and it is testing the October low. Traders are wondering if the selloff was just a sell vacuum test of support or a move down to fill the April 2017 gap.
A breakout below major support usually has a pullback above that support. Also, that small bull day from 3 days ago represents minor profit taking. If today closes around its open or near its high, that would be a sign of a 2nd profit taking attempt.
When there is a sell climax like this and consecutive attempts at profit taking, the odds shift in favor of a bounce. The first target is a move above the October low.
Even though the 1st rally will be minor, this sell climax is extreme. The short covering could last a couple weeks and test the 20 day EMA. But, the bulls need a reversal day. Today or a day next week could be that day.
While the bulls might get a 2 week rally soon, this low is near the gap above the April 2017 high. The EURUSD probably cannot escape the magnetic pull of that support. Therefore, the EURUSD will likely close that gap within a month.
Double bottom with October low, but minor reversal
Finally, the bulls want the short covering rally to become a bull trend reversal. They see a lower low double bottom with the October low. However, the 1st reversal up from a sell climax is usually minor. Traders like to see at least a small double bottom before concluding that the bulls have a chance of a major reversal.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market has been in a 25 pip trading range overnight. The bars are small and day traders have been looking for 10 pip scalps.
Tuesday was a small short covering day. Because there is usually a 2nd attempt at profit taking in a sell climax within a few days after the 1st attempt, traders are looking for a short covering rally to begin within a few days. This could result in several strong bull trend days.
But, there is no sign of a trend so far today. Day traders will continue to scalp unless there is a strong breakout up or down.
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.
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 had a wedge rally to a double top and then a selloff to a new low of the day. It broke above the 18 bar range (the range of the 1st 18 bars) and then below. But even with the selloff, there was mostly trading range price action. Today was not a strong bear day.
The Emini formed a bear inside day on the daily chart. Since yesterday was an outside day, there today is now an ioi sell signal bar for Monday. Because the daily chart is in a bull trend and today closed on its high, the odds favor higher prices on Tuesday (Monday is a holiday).
The bears want the 2nd half of February to reverse the 1st half. This would then be similar to January. The bulls, however, are hoping that the 4 month Small Pullback Bull Trend is resuming. They want any selloff only to last only a day or two and becomes a bull flag.
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.
Didn’t the late rally make today a bull trend day?
Yes, a trading range day that closes on its high on the 5 minute chart is a bull trend day on the daily chart. It is still a trading range day on the 5 minute chart, but it had a strong trend up into the close. There were several trends up and down on the 5 minute chart and all were part of a trading range day.