Emini and Forex Trading Update:
Tuesday October 29, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini gapped up to a new all-time high yesterday. Since yesterday was a Monday, there is also a gap up on the weekly chart.
The bulls want a measured move up. Their minimum goal is based on the height of the 5 day bull channel from the October 18 low to the October 24 high. Since it was about 40 points, their 1st target is around 3055.
The bears want the gap to close this week. If there is a gap down, there would then be an island top.
When there is a gap above important resistance, the Emini often goes sideways for a day or two. It then decides if the breakout will succeed or fail.
Tomorrow’s FOMC announcement is a potential catalyst for a big up move up or down. Since traders may wait for the news before trading aggressively, there is an increased the chance of sideways trading today.
Overnight Emini Globex trading
The Emini is down 2 points in the Globex session. It therefore might have a small gap down on the open. That would create a 1 day island top. Island tops and bottoms are typically minor reversal patterns. Also, a small gap usually closes in the 1st hour. It would not significantly increase the chance of a failed breakout above the July all-time high.
Yesterday was a small trading range day. Tomorrow’s FOMC rate cut announcement is a potential catalyst. Consequently, traders expect that today will probably be another mostly sideways day.
Sometimes traders front-run a major announcement. That means there is a slightly increased chance of a big trend up or down today. Unless there is a series of big trend bars, day traders will assume that today will again have a lot of trading range price action.
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.
EURUSD Forex market trading strategies
The EURUSD daily Forex chart might be forming a higher low major trend reversal and a micro double bottom just above the EMA. Traders expect a 2nd leg sideways to up after the strong October rally. Tomorrow’s FOMC announcement could be the catalyst for the next leg up.
But the chart has been in a broad bear channel for over a year. Because of that, this selloff is probably not sufficient to convince traders that the EURUSD has tested low enough or long enough. Since most bulls think the 7 day pullback has more to go, a reversal up from here will probably only last 2 – 3 days.
The EURUSD will likely have to clearly dip below the EMA and probably test the October 15 buy climax low. If it then reverses up, the bulls will be more confident that the 2nd leg up is beginning.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart reversed up today from a perfect double bottom with Friday’s low. While a 2nd leg up on the daily chart might start today, the overnight range is only 30 pips. Also, today so far is the 3rd consecutive small day. In addition, all financial markets might remain quiet ahead of tomorrow’s 11 am PST FOMC announcement. Unless the bars on the 5 minute chart get bigger and there is a 30 – 50 pip breakout up or down, day traders will continue to look for 10 pip scalps today.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
I will post chart after the close.
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.
End of day summary
The Emini traded below yesterday’s low and then above its high. Today was therefore an outside up day. However, at the end of the day, it traded back below yesterday’s low. At that point, the day was also an outside down day.
Today remained a trading range day ahead of tomorrow’s 11 am PST FOMC announcement. Since it closed on its low, it is a sell signal bar for tomorrow for a failed breakout above the 4 month range. There is now a micro double top on the daily chart, which slightly increases the odds for the bears.
If tomorrow gaps down, there will be a 2 day island top on the daily chart. While it could lead to a bear trend, the Emini will more likely continue the 2 days of trading range price action going into tomorrow’s 11 am announcement.
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.
Al,
Would today be considered an outside up day since there’s a bull body even though it closed way below the midpoint of the bar? Or is this considered an outside down day?
Thank you
It was both. It was an outside up day and then became an outside down day. By just looking a the daily chart, it is impossible to tell which came first, and it therefore was neutral.
It closed above the open, erasing some of the bearishness of the reversal down. Also, it was also a small doji day, which is neutral ahead of tomorrow’s report.