Emini and Forex Trading Update:
Friday May 15, 2020
I will update again at the end of the day.
Pre-Open market analysis
The Emini reversed up yesterday after breaking below the May 4 low. That is the neckline of the 3 week double top. Yesterday is now a High 2 bull flag buy signal bar for today. The bulls want the rally to continue up to the 200 day moving average and the 3000 Big Round Number.
But if today is anything less than a strong bull day, traders will expect a 2nd leg down. If they get the start of a 2nd leg down within the next few days, they will then look for a selloff to 2600 in May or June.
Today is Friday so the weekly chart is important. This week is an outside down week. There is now a micro double top at the 20 week EMA, which is a reflection of the double top on the daily chart.
If the bears can get the week to close below last week’s low, traders will expect a 2 – 3 week selloff to 2600. If the week closes well above last week’s low, the bulls will try to continue the bull trend up to 3000.
Overnight Emini Globex trading
The Emini is down 30 points in the Globex session. Yesterday formed a bull channel on the 5 minute chart. A bull channel is a bear flag because traders know that there is usually a bear breakout and then a transition into a trading range.
That increases the chance of a lot of trading range price action today. But yesterday’s range was big. Even if today is a trading range day, there should be at least one swing up and one swing down.
The Emini is in the middle of the week’s range. It might not be able to reach the top or bottom of the range today. When that is the case, it often pays attention to the middle, which is 2850. If the bulls can get the week to close above the midpoint, it would be a sign that they won the week. A close below the midpoint is a sign that the bears were a little stronger.
EURUSD Forex market trading strategies
The EURUSD Forex market on the daily chart is deciding on the direction of its next move. It has been in a tight trading range with small ranges for 8 days. That range in near the bottom of a month-long range, which is nested in an 8 month range.
Every trading range always has both buy and sell setups. The bulls have a head and shoulders bottom. The right shoulder is a small double bottom. There is a April/May double top and a 4 day double top bear flag.
Traders believe that the current price is just above right. There is no energy to change it.
But, the price of any financial market does not stay in a tight range forever. Traders expect a breakout soon. But, in what direction? The market could not be in such a tight range if either the bulls or bears had an advantage.
This is a Breakout Mode pattern. There is a 50% chance of a breakout up or down. While waiting for the breakout, day traders are just looking to scalp small reversals up and down.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market has been in a 50 pip range overnight. Today’s low is above yesterday’s low. It just broke above yesterday’s high in the past 10 minutes. The bulls hope that the 50 pip rally is the start of a bull trend day.
Today is Friday so support and resistance on the weekly chart are important. This brief rally is stalling at the open of the week. It’s purpose might be simply to convert the candlestick on the weekly chart to a doji bar from a bear bar.
Day traders have been disappointed by moves up and down for 2 weeks and they have been taking quick profits. If the bulls can get a few more bull trend bars, they will hold onto their longs for a swing up today. If the follow-through is bad over the next few bars, they bulls will scalp out and the bears will sell for a scalp down.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
The Emini formed a trading range day today. It closed almost exactly in the middle of the week’s range. The bulls want a reversal up from a double bottom with the May 4 low. They then want the rally to continue up to the 200 day moving average and the 3000 Big Round Number. However, the bears want this week’s selloff to be the start of a bear leg down to 2600.
Traders need more information. If there are big bull days early next week, the bulls will probably reach their goal. But if there is a reversal down from a lower high, the selloff should reach 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.