Emini and Forex Trading Update:
Monday November 11, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini formed a bull reversal day on Friday. Friday is now a High 1 bull flag buy signal bar for today in a strong bull trend on the daily chart.
Because the rally is extreme on the daily and weekly charts, the bulls will probably take some profits in November. This will create a 1 – 2 week pullback of 50 – 100 points. There are now consecutive small parabolic wedge tops on the daily chart, which usually will lead to a pullback. Look at late February, April, and July for similar rallies, but I suspect the pullback will not be as deep this time.
However, the bull trend is strong. Traders will see the selloff as a buying opportunity. The Emini will probably work higher through the end of 2019.
Did the profit-taking begin on Thursday? It might have, but it is still more likely that the rally will have to get above the 3100 Big Round Number first. Many bulls want to take some profits above that resistance. However, many will begin to take profits just below. If enough do, the Emini will have begun the 2 week pullback last week. In either case, the odds favor a brief pullback soon and then a resumption of the rally through the end of the year.
Overnight Emini Globex trading
The Emini is down 12 points in the Globex session. Traders are deciding if last week was the temporary end of the rally on the daily chart. Has the Emini begun a 2 week leg down, like in March, May, August, and September? Because one will probably start in November, there is an increased chance of bear trend days this week.
However, most days over the past month have had a lot of trading range price action. Until there is a clear strong bear trend on the 5 minute chart, day traders will expect mostly trading range price action every day.
What about the buy signal on the daily chart? Even if it were to trigger today, the upside is probably small until after a 2 week pullback. Rallies often end with a buy climax. Friday’s strong rally is a reasonable candidate. The bears hope it was simply a buy vacuum test of Thursday’s all-time high.
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 in a bear channel for 2 years and in a trading range for 3 months. Trading ranges have strong legs up and down, as do channels, but most reverse.
Also, the October rally was the strongest one on the weekly chart in the 2 year bear trend. Consequently, last week’s selloff will probably not lead to a resumption of the bear trend. More likely, a bull leg will begin within a couple weeks.
The selloff has been strong. Therefore the bulls will probably need a micro double bottom or a small double bottom. This is the opposite of what happened with the strong October rally. The bears needed a small double top 2 weeks later before they could take control.
But if there are consecutive big bear bars closing below the October low, then traders will consider the possibility that the rally has ended. Without that, the bulls will probably soon buy this selloff and the bears will take profits. Both know that a leg up is likely before there is a strong break below the October low.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart overnight traded a fraction of a pip below last week’s low, but then reversed up. The reversal has been small, but the absence of a strong selloff below last week’s low means that traders are buying below things. That is a characteristic of a trading range. Day traders will continue to look for reversals.
The overnight low was from a wedge bottom on the 4 hour chart. Traders will expect a couple legs of sideways to up trading early this week. They will buy 20 – 30 pip pullbacks and look for 10 – 20 pip scalps.
The bears see that the reversal up has not yet been strong. They therefore will also look for scalps.
Both however, believe that the rally will get above the October 25 low of 1.1073. That is because it is the breakout point of the double top. Rallies in trading ranges typically go above resistance before there is profit-taking.
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 gapped down but rallied on the open. Today was a bull trend day. This is true despite the midday pullback and so much time in tight trading ranges. It is a High 1 bull flag buy signal bar on the daily chart for tomorrow.
Traders are deciding whether last week was the start of a 2 week pullback. Many bulls will continue to buy until the Emini reaches 3100. They will probably take some profits there or on the 1st reversal down.
However, even if there is a 2 week selloff, traders will buy again. The momentum up is strong enough so that the 1st reversal down will likely be minor.
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.
