Emini and Forex Trading Update:
Monday September 23, 2019
I will update again at the end of the day.
Pre-Open market analysis
Friday was a surprisingly big bear day on the Emini daily chart. Since September 3, I have been saying that the Emini would break above the 2940 top of its 4 week range, but then pull back below the top of that ledge. Friday might be the start of the pullback below the 2940 top of the ledge.
What happens once there is a dip below the top of a ledge? The bulls try to get a reversal up. They see the selloff as a breakout test of support. They then buy, hoping for a resumption of the bull trend.
However, the bears want the selloff to continue down and begin a bear trend. Unless they get several bear days this week, the probability favors the bulls. Most reversal attempts in bull trends form bull flags.
Overnight Emini Globex trading
The Emini is down 2 points in the Globex session. Friday’s midday selloff was big enough to qualify as a Major Bear Surprise Bar. That means it can dominate the trading for the next few days. It increases the chance that the Emini is beginning its pullback to below the 2940 top of the August ledge on the weekly chart.
The bulls never want any selloff. They therefore will buy around Friday’s and last week’s low. They will try to form a micro double bottom on the daily chart at the 20 day EMA.
Friday’s big selloff and then big reversal up created confusion. Confusion typically leads to a trading range. Therefore, there is an increased chance of buyers around Friday’s low and then a trading range within Friday’s lower trading range.
A big move down like on Friday increases the chance of follow-through selling within a few days. It also increases the chance of a trend up from a double bottom. This confusion will probably lead to early trading range trading today.
Friday’s setups
Here are several reasonable stop entry setups from Friday. 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 has been sideways for 4 weeks. It has been in a bear channel for a year. There is no sign that the series of lower highs and lows is about to end. Also, there are 2 measured move targets and a gap around 1.08. Consequently, this attempt at a bottom will probably be minor. If the bulls get a reversal up this week from a test of the September double bottom, the rally will probably fail to get above the August high.
Because the daily chart is sideways, the bulls and bears are balanced. Traders believe that the next 2 – 3 week move is as likely to be up as it is to be down.
Even though there probably will be a breakout within a few weeks, until there is a breakout, they are betting on reversals. They buy low, sell high, and take profits every couple days.
Overnight EURUSD Forex trading
The EURUSD 5 minute chart traded below last week’s low at the start of the European session and then reversed up. The rally has only been 30 pips and in a broad channel. This is not yet the start of a strong bull trend. Day traders will look for scalps up and down until there is a strong trend.
The minimum goal for the bulls is to have today close above the open. Today would then be a High 2 buy signal bar on the daily chart. It would also be a buy signal for a pullback from the September double bottom. There would be a Double Bottom Pullback buy signal.
If the bears can get today to close near its low, traders will expect a break below the September low this week. Their next target is 1.08.
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.
End of day summary
The Emini was in a triangle for the 1st 90 minutes and then rallied in a Small Pullback Bull Trend. After a 3 hour trading range, there was a small breakout to above 3000 and the 60 minute EMA. After stalling for a few bars on the 5 minute chart, many bulls took profits. This resulted in a close off the high.
Today was a bull day and a buy signal bar for tomorrow on the daily chart. But the tail on top makes is less reliable.
The Emini has been sideways for 3 weeks. Each of the other buy and sell signal bars failed to lead to a trend. Consequently, this is not a strong buy setup on the daily chart.
While the Emini is still likely to make a new high in September or October, the odds are that it will continue to do what it has been doing for several weeks. Traders should expect reversals every 2 – 3 days.
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 Intraday Market Update page.
Hello Dr Brooks,
Oftentimes you talk about scaling in when your scalping position goes against you. Do you also scale in when you are swinging a position that goes against you? Or do you just rely on the stop and if its triggered you are out?