Emini and Forex Trading Update:
Friday May 8, 2020
I will update again at the end of the day.
Pre-Open market analysis
Yesterday gapped up and formed a trading range day. The bulls want a break above the April high. It is very important on the daily, weekly, and monthly charts.
Since April is a High 1 buy signal bar on the monthly chart, the bulls want a break above its high. Last week was a sell signal bar on the weekly chart. The bulls want this week to be outside up. They need the Emini to get above last week’s high, which was also the April high. Finally, that high is the top of the wedge on the daily chart. The bulls want the bears to give up.
But even if the bulls get a move above the April high, there will be sellers somewhere above that high and below the February high. Traders believe that there is not much left to this rally. We will soon find out if a 2 – 3 week pullback to 2600 has begun or if we 1st go above the April high.
It is still slightly more likely that the pullback is underway. However, the Emini has been sideways for a month. It has been reversing every 2 – 3 days. Traders are still deciding. In the meantime, they are betting on reversals.
Overnight Emini Globex trading
The Emini is up 33 points in the Globex session. Last week’s high, which is the April high, of 2947.25 is only about 35 points higher. That is within reach today.
Because it is such an important price, there is an increased chance of a strong trend up or down. The bulls want a breakout above and then a rally to the March 3 high. The bears want a reversal down. This week would then simply be a test of the top of the wedge on the daily chart.
Most days over the past month have had a lot of trading range price action. They have typically had at least one swing up and one swing down. Day traders will expect that again today. But, they will be prepared to swing trade if there is a surprisingly big move in either direction.
EURUSD Forex market trading strategies
The EURUSD Forex market on the daily chart formed a bull reversal day yesterday near the bottom of a 2 month trading range. Yesterday was similar to April 24 buy signal bar. The next day was the entry bar, which was weak.
Today is the entry bar for yesterday, and so far today is another doji. The bulls need a strong reversal up. That would be a sign that the price is too low. But today is only a doji bar. Traders are not rejecting this price. Therefore, the EURUSD might have to probe lower to find a price that is too low.
If there continues to be no strong rally today, the bears will see today as a small pullback their selloff from the May 1 high. Today would then be a Low 1 sell signal bar for Monday.
But unless it has a bear body closing on its low, it would be a weak sell signal bar. There would probably be buyers below its low and the bulls would again try for a reversal up next week.
The weekly chart is important today
The important price today is last week’s low. Last week was a Low 2 sell signal bar on the weekly chart. The sell triggered this week when this week traded below last week’s low.
But last week was a big bull bar. That is a weak sell signal bar. This week is currently back above last week”s low. It is therefore a weak entry bar for the bears.
The bears want the week to close on its low. At a minimum, they want it to close below last week’s low. That would increase the chance of lower prices for next week.
Without that, traders will continue to see the market as lethargic. They will keep betting on reversals and taking profits every few days.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market traded above yesterday’s high overnight. That triggered the buy signal on the daily chat. However, it did not rally strongly. Instead, it is back at yesterday’s high. Also, the range has been small.
Last week’s low is 1.0801. That is 40 pips below the current price. With today’s small range, there is not much energy. Unless there is a surprisingly strong reversal down today, today will probably close above last week’s low. That will increase the chance of another attempt at a rally next week.
The daily and 5 minute charts have very little energy. Day traders are continuing to look for reversals and small scalps as they wait for the next strong breakout up or down.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
After a gap up, the Emini rallied from a pullback to yesterday’s high. There was a midday wedge reversal, but it failed. Today was a broad bull channel with a late rally to above the Globex high.
The bulls want to get above the April high. That would trigger a monthly buy signal. It would also run the stops for the bears who sold the nested wedge top on the daily chart. Traders are deciding if this week will form a lower high and lead to a 2nd leg down from the wedge, or if the Emini will first break above the top of the wedge. Either way, it should fall to around 2600 in May or June.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
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.
Gosh, now heading to 3000. Have a good weekend.