Emini and Forex Trading Update:
Tuesday April 6, 2021
Pre-Open market analysis of daily chart
- Yesterday gapped to a new all-time high on the daily and weekly charts.
- Big bull bar that closed on its high in strong bull trend so higher prices likely.
- 7 consecutive bull bars on daily chart is unusual so climactic.
- Strong bull trend so bulls will buy the first 1- to 3-day pullback.
- Since yesterday gapped up late in a buy climax, bears will try to get gap down within next week or so. That would create an island top. But, most island tops are minor reversal patterns.
- When there is a big gap up and a breakout, the Emini typically goes sideways for 2 to 3 days, starting within a couple days of the breakout. However, this rally is accelerating up, and could quickly go higher.
- Sometimes a strong breakout, like over the past 3 weeks, accelerates up and then reverses down strongly from a blow-off top.
- If the Emini continues up strongly this week, a blow-off top will become likely, like in late 2017. Smaller versions formed in June and September last year. Each led to about a 10% pullback over a couple weeks.
Overnight Emini Globex trading on 5-minute chart
- Down 7 points in the Globex session.
- Probably will open within yesterday’s trading range, so Breakout Mode.
- Bulls want a measured move up, and bears want a measured move down.
- Day after big breakout day tends to be sideways.
- If today is sideways, increased chance of close below the open since there are already 7 consecutive bull days on the daily chart, which is unusual.
- Therefore, if today is within 10 points of open in the final hour, Emini will probably get drawn to the open. Then, traders will decide at the end of the day whether today will close above or below the open.
Yesterday’s Emini 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
EURUSD Forex daily chart
- Short covering rally from nested wedge rally.
- Should get above March 9 low breakout point.
- Could reach March 18 high, which is the top of the most recent sell climax.
- Bear flag (minor reversal) more likely than bull trend reversal (major reversal), unless breaks strongly above March 18 lower high.
Overnight EURUSD Forex trading on 5-minute chart
- Trading above yesterday’s high, just a few pips below the March 9 low.
- It should get above that low today, or this week.
- Small overnight rally from double bottom pullback.
- Breaking above the overnight trading range. During the trading range, day traders were buying and selling for scalps.
- If the bull breakout of the past hour accelerates up strongly above the March 9 low, day traders will swing trade part of their long positions, and they will stop shorting.
- Bears want a reversal down from around the March 9 low, but no top yet.
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. 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
- Bull Trend From The Open, but stalled at yesterday’s high.
- Reversed down from a wedge rally to a higher high double top.
- Reversed back up from a sell climax to just above the open, so probably not good enough test of open.
- Late selloff from double top.
- Reversed up from new low, but closed only slightly above open.
- Today was the 8th consecutive bull bar on the daily chart, but it had a small body.
- That is an unusual number of bull bars and therefore unsustainable and climactic. With the close in the bottom third, increased chance tomorrow will have a bear body. Also, tomorrow will probably trade below today’s low.
- While 8 bars is a buy climax, it is also a sign of strong bulls. Bulls will buy below today’s low and the first 1-to 3-day pullback.
- Emini has been oscillating around 4070 for a couple days. It might be a magnet again tomorrow.
- Today’s high was a ledge top (5 bars in a tight trading range with identical highs). The Emini will probably break above it this 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 Time
When I mention time, it is USA Pacific Time (the Emini day session opens at 6:30 am PT, and closes at 1:15 pm PT). You can read background information on the intraday market reports on the Market Update page.
Not in trading room this month. Did you talk about expanding triangle on mon & tues chart? Are you looking at that pattern for possible setups today (wed)?
I did mention it, but the bull trend is so strong that tops are lower probability. As I wrote above, today is likely to go below yesterday’s low and to have a bear body, but the best the bears will probably get is a brief pullback after 8 bull bars.
Dear Al,
Couldn’t it be risk of failed BO at EMA if I bought bar 3 with regards to two bull dojis from the open and possible TRO?
Thank you.
As a general rule, consecutive bull bars with one closing near its high and with a big bull body is a reasonable buy, especially in a strong bull trend. But I agree that a 50% pullback to the EMA made it a possible bull trap. Remember, it was a swing buy, and most swing trades only have a probability of about 40%. This one was probably about 50%. Another one of my general rules is that 50% of strong moves on the open will reverse.