Emini and Forex Trading Update:
Friday November 13, 2020
I will update again at the end of the day.
Pre-Open market analysis
The Emini formed a bear bar on the daily chart yesterday, but it closed in the middle of the day’s range, like most of the days over the past 2 weeks. The bears want follow-through selling today, while the bulls want a reversal up.
The Emini might have to reach the November 6 low within the next few days. On the 60-minute chart, that is the bottom of a 2-day tight trading range. It is therefore a reasonable candidate for a Final Bull Flag on the 60-minute chart. That makes it an important magnet below. If the Emini gets there, traders will look for at least a day or two bounce.
The bulls want today to reverse up from a micro double bottom with Tuesday’s low. Despite the bear body yesterday, there was a big tail below the bar, representing late buying. This was a 2nd reversal up from a test of the October 12 high. That was the breakout point for last week’s rally. The bulls hope that the bull trend will resume today after yesterday’s test. However, the bear body and Monday’s selloff make more sideways to down likely before the bulls get a new high.
Traders are deciding if this week will be the high of the year or just a pullback in a strong bull trend. At the moment, the bull case is slightly more likely. However, a couple big bear days could shift the probability in favor of the bears.
Weekly support and resistance
Today is the final day of the week. Therefore weekly support and resistance can be important, especially in the final hour.
The bears want the week to close on the low of the week. That would be below last week’s high and the September all-time high. It would increase the chance of at least slightly lower prices next week.
The bulls want the week to close above the October 12 high, which was the breakout point for last week’s rally. They want this selloff to be simply a pullback to test that breakout point.
Overnight Emini Globex trading
The Emini is up 25 points in the Globex session. It will therefore open near the top of its 3-day trading range and back above the 20-bar EMA on the 60-minute chart.
Markets tend to continue to do what they have been doing. Most of the trading has been sideways for 3 days. Day traders expect more today, especially since yesterday is a weak buy signal bar on the daily chart. Also, 9 of the past 11 days closed either in the middle of the day’s range or near the open of the day. It is reasonable to assume that today will follow that pattern.
A trend day can come at any time. If there is a series of strong trend bars early in the day in either direction, traders will look for a trend. Without that, they will continue to look for reversals.
However, even if today is again mostly sideways, the average daily range has been big. Day traders have had swing trades every day, despite lots of sideways trading.
Remember, today is Friday so weekly magnets can be important, especially in the final hour. The most important ones are last week’s high, the October 12 high, and the midpoint of the week’s range.
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 has been sideways for 4 days after pulling back from a small breakout above the September 10 high. The bulls see this as a High 1 bull flag. After last week’s strong rally, they expect at least a small 2nd leg sideways to up.
While they would like the rally to continue to far above the September 1 high, they know that most strong legs in a trading range reverse. They therefore need a strong rally soon and consecutive closes above the September high. Otherwise, they will give up and the EURUSD will reverse down from the top of the range, as it has many times before.
The bears know that there will probably be a test of Monday’s high before there is a swing down to the middle or low of the trading range. But, they hope that the reversal down began on Monday. However, in the absence of consecutive bear bars closing near their lows, it is more likely that there will have to be at least a micro double top before there is a test of the bottom of the range.
The probability favors at least a test up to around the November 9 high. However, until there are a couple closes above or below the 4-month trading range, traders will continue to look for reversals every week or two.
Overnight EURUSD Forex trading
The 5-minute chart of the EURUSD Forex market broke above yesterday’s high overnight. This triggered a weak High 1 bull flag buy signal on the daily chart. However, it reversed back down below yesterday’s high and the top of the 4-day tight trading range. It has been mostly sideways with a slightly bullish bias all night.
Day traders see today as a trading range day. They have been scalping up and down for 10 pips. Because today triggered a buy signal on the daily chart and the reversal down so far has formed a higher low, the day is slightly more bullish than bearish. The bulls want today to accelerate up and become a big bull trend day. That is unlikely at the moment. Alternatively, they want today to close above yesterday’s high. That would increase the chance of at least slightly higher prices on Monday.
The bears want the reversal down from above yesterday’s high to continue to below yesterday’s low. Today would then be an outside down day. That would increase the chance of lower prices on Monday. Alternatively, they want today to close below the open. Today would then have a bear body. At a minimum, they want today to close below yesterday’s high. That would reduce the chances of a strong rally on Monday.
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
After a trading range open, the Emini reversed up from a wedge bottom at the EMA. It then rallied in a Small Pullback Bull Trend Day. The week closed above its midpoint, which his slightly bullish. Also, today closed above Wednesday’s close and it is now the all-time highest close.
If the bulls get follow-through buying on Monday, traders will expect a new all-time high next week. But if Monday reverses down, there will be a micro double top on the daily chart. Traders will look for a test of the tight trading range on the 60-minute chart, just below 3500. Whether or not there is a pullback, the bull trend is strong enough to make higher prices 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.
