Emini and Forex Trading Update:
Tuesday November 12, 2019
Pre-Open market analysis
The Emini gapped down yesterday but then rallied. It was a bull bar on the daily chart and it is a High 1 bull flag buy signal bar for today. Many bulls are waiting to take profits above 3100. Therefore 3100 is a magnet above.
The bulls are continuing to buy small pullbacks, expecting a breakout above 3100 this week. The momentum up is strong enough to make it likely. However, the odds are that the Emini will pull back for a couple weeks at some point in November, just as it has after 4 other rallies this year. The other pullbacks were 5 – 8%. This one will probably be less because of the 5 consecutive bull bars on the weekly chart. The bears will probably need a micro double top before they can get more than a 50 – 100 point pullback.
The 5 consecutive bull bars on the weekly chart is extreme. It increases the chance of a bear bar this week. To get that, the week would have to close below yesterday’s open. Therefore the open of the week might be a magnet all week, especially on Friday.
Overnight Emini Globex trading
The Emini is unchanged in the Globex session. It is just below the 3100 Big Round Number. There is therefore an increased potential for a strong breakout or a strong reversal.
After 2 bull days on the daily chart, The Emini will likely go above yesterday’s high and trigger the High 1 bull flag on the daily chart. But a rally to a new high would be the 3rd small leg up in the past 7 days. That would increase the chance of a reversal down from a micro wedge top within a few days.
Also, the past 2 days formed a triangle on the 5 minute chart. A triangle late in a bull trend is often the Final Bull Flag. That is another reason to expect a break above 3100 to reverse down.
Finally, this week will probably not form the 6th consecutive bull bar on the weekly chart, which would be unusual. As a result, traders should expect the week to close below the open of the week to create a bear bar on the weekly chart. Consequently, traders should expect at least a small selloff at the end of the week.
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 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 Forex market on the daily chart has sold off for 8 days and is breaking below yesterday’s low. Yesterday is therefore a Low 1 bear flag.
Because it was a bull bar, it is a low probability sell signal bar. Also, the chart is just above the October 15 buy climax low. That is a magnet and therefore support. Consequently, traders expect buyers at and not far below yesterday’s low.
If there is a small reversal up today or tomorrow, the bulls would then have a micro double bottom. They would then expect a reversal up. That would be a higher low major trend reversal.
But the selloff was strong. If there is a reversal up, it will probably be minor, which means another leg in the trading range.
Consequently, over the next week, the EURUSD might fall a little more and then bounce. Once it bounces, it will then probably test down again. A little down, a little up means mostly sideways for a few days.
Overnight EURUSD Forex trading
The EURUSD Forex market on the 5 minute chart sold off 30 pips overnight. By falling below yesterday’s low, it triggered a sell signal on the daily chart.
But instead of a strong selloff, it bounced and has been trading around yesterday’s low. This is not how a successful breakout typically looks. It increases the chance of another small day today.
So far, the bears have been selling. But the absence of a strong selloff indicates that they prefer to sell rallies and take quick profits. Also, because the selloff is not strong, the bulls will buy reversals up for scalps.
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
I have been saying that the Emini would probably have to get above 3100 before the bulls began to take profits. It rallied strongly on the open and broke slightly above the target. But it then sold off to a new low of the day. This is not how a strong breakout typically behaves. It increases the chance of a 2 week pullback in November.
There is now a micro wedge top over the past 7 days. Since today had a small bull body, it is a weak sell signal bar for tomorrow. But the context is good for a pullback.
It is more likely that the Emini will sell off 50 – 100 points before it goes much higher. At a minimum, this week should close below the open of the week. This is because 6 consecutive bull bars on the weekly chart would be fairly unusual at the top of a 2 year trading range.
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.
