Emini and Forex Trading Update:
Wednesday May 1, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini reversed down on Monday and up yesterday. It closed just below Monday’s high and was almost an outside up day. Yesterday is therefore a buy signal bar for today. With it just below the all-time high, the Emini could gap up to a new high on the open.
It is important to note that there is an FOMC announcement at 11 am today. That is always a catalyst, and it will probably dominate the day. The Emini is unlikely to have a strong trend up or down ahead of the report.
It is better to think of the day as starting over at 11 am. At that time, day traders should focus on what happens on the report and pay much less attention to the earlier bars.
Reversals in the first 10 minutes after the report are the norm. Also, the bars are typically big and the market moves fast. Most traders should not resume trading until at least 10 minutes after the report.
Because the Emini is testing the all-time high, there is an increased chance of a big move up or down. This particularly true after the report. Big reversals are common at any point after an FOMC report. Consequently, day traders have to exit quickly if the Emini begins to reverse.
There is only a 20% chance of a strong, relentless trend after the report. If one forms, traders should look to enter on any one or two legged pullback.
Overnight Emini Globex trading
The Emini is up 10 points in the Globex session. Today might therefore gap up to a new all-time high. A gap above key resistance increases the chance of a trend day. If there is a trend, up is slightly more likely.
There is a strong trend day from the open only 20% of the time. Most often, a big gap up leads to a trading range for the 1st hour. The bulls look for a double bottom or wedge bottom to around the EMA. However, the bears look for a double top or wedge top and then a swing down.
Day traders should go flat ahead of the 11 am PST FOMC announcement. There is usually a quick move in the wrong direction within the 1st few minutes. Consequently, it is usually better to not resume trading until at least 10 minutes after the report.
Furthermore, day traders should be open to anything. They have to be quick to determine if the Emini is in a trading range or a trend. In addition, they should be quick to exit their positions if the Emini reverses. This is because the reversals can be abrupt and go far.
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 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 rallied for 4 days after breaking to a new low in a 10 month bear channel. It is now at the EMA. All prior rallies have ended above the EMA.
However, the April 12 minor lower high at 1.1324 is nearby. Every prior high and low is a magnet. Consequently, this rally might continue up to that high before the bears will sell again.
The 10 month bear channel will continue until the bulls can get 2 or more closes above a major lower high, like the March 20 high. In addition, they then need to get a higher low. That would convert the broad bear channel into either a trading range or a bull trend. Until then, traders will expect reversals up and down every 2 – 3 weeks.
Today’s 11 am PST FOMC announcement is a potential catalyst for a big move up or down. The day has been small so far. It probably will remain small until after the report. If day trading after the report, it is better to wait at least 10 minutes. This is because the initial move on the report typically is big and reverses within the 1st 10 minutes.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been in a 20 pip range for 5 hours. That makes it difficult for day traders to make even a 10 pip scalp. They will trade reversals until there is a strong breakout up or down. That might not happen until the 11 am PST FOMC announcement.
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 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 tested the September 2956.00 all-time high to the tick before and again after today’s FOMC report. It reversed down both times. It reversed down from above yesterday’s high to below its low. Today is an outside down day. Yesterday’s high was at Monday’s high. It reversed up from below yesterday’s low. It was therefore a variant of an outside up day.
Consecutive outside days in a bull trend is a sell signal for tomorrow. Today is a good candidate for the start of a 2 – 3 week pullback.
The bulls want tomorrow to be a bull day. For example, if tomorrow is a bull inside day, it would be an ioi buy signal for Friday. While this is possible, the odds at the moment favor the start of a 2 – 3 week pullback. While not likely at the moment, the selloff could even last a couple months and retrace half of the 4 month rally.
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.
