Emini and Forex Trading Update:
Monday September 28, 2020
I will update again at the end of the day.
Pre-Open market analysis
The Emini is reversing up from a small wedge bottom on the daily chart. When Friday went above Thursday’s high, it triggered a minor wedge bottom buy signal. The rally should last a few days.
Last week is a High 2 buy signal bar on the weekly chart at the 20 week EMA. Today will probably go above last week’s high and trigger the buy signal.
There is currently a 40% chance that this week was the end of the 4-week pullback. However, it is more likely that the Emini will fall below last week’s low before there will be a new high. With a likely tumultuous election, there might not be another new high this year.
September ends on Wednesday. I have been saying for the past week that September should close above the August low because the monthly chart had 5 big bull bars. An outside down bar in a strong bull trend usually closes above the low of the prior bar. This reduces the chance of a big selloff early this week.
Overnight Emini Globex trading
The Emini will probably have a big gap up open today to above last week’s high. Because of the wedge bottom on the daily chart, the rally should reach to around the September 16 lower high this week at around 3400. Day traders will therefore be more inclined to buy.
But when there is a big gap up, the Emini is far above the EMA. The bulls do not want to pay far above the average price unless the early bars are far above average. That increases the chance of an early trading range. If there is a trading range open, the bulls will look to buy either a wedge pullback or a double bottom around the EMA. Also, the bears will sell a wedge rally or a double top in the 1st couple hours, expecting a test down to the EMA.
Can today reverse down on the open and form a big bear trend from the open, like Wednesday? Probably not. This is true even though today will open around the resistance of the 20-day EMA. Today’s gap up is is a 2nd reversal up from a cluster of support at 3200. The odds favor sideways to up trading for at least a couple days.
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. I do not want the lines to be distracting. If they are longer, I make them dotted. But, they have to be visible, so I make the shorter ones solid. Buyers of both the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).
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.
If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.
EURUSD Forex market trading strategies
The EURUSD Forex market on the daily chart is reversing up from a micro double bottom with Thursday’s low. The bulls hope that the 4-week selloff was just a 2-legged pullback in a 4-month bull trend. If today closes near its high, it will be a buy signal bar for a High 2 bull flag on the daily chart.
The bears know that there is typically a pullback to the breakout point. They therefore expect a test of the August 3 low and the September 17 low. That would also be a test of the 20 day EMA.
They hope that the rally will fail there and form a lower high. They want what they see as a bear trend to continue down for a measured move and a test of the June 10 high. That high was the breakout point for the July rally.
What is likely this week? The EURUSD will probably rally for at least a few days to the resistance to between 1.18 to 1.19. Then traders will decide if the 4-month bull trend will resume or if the correction will continue down to the June 10 high.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market rallied strongly overnight to near Friday’s high. The goal for the bulls today is to have the day close near today’s high. The more it does, the more likely the EURUSD will rally to around 1.18 this week. Therefore, the bulls will buy pullbacks today.
They would like this week to be a bull bar closing near its high on the weekly chart. Traders will then look at last week’s big bear bar as a possible bear trap and failed breakout.
The bears want today to close down in the middle or bottom of the day’s range. Today would then be a weaker buy signal bar for tomorrow. A reversal up would then be more likely to fail within 2 – 3 days at around the September 17 high.
Day traders have only been buying overnight because of the strong bull trend. But the overnight rally has had 3 legs up and it is near the resistance of Friday’s high. Therefore the bulls will start to take profits. If there is a 20-pip pullback, bear day traders will begin to sell for 10-pip scalps. Until there, it will continue to be easier to make money as a bull today.
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. I do not want the lines to be distracting. If they are longer, I make them dotted. But, they have to be visible, so I make the shorter ones solid. Buyers of both the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).
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.
If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.
End of day summary
The Emini gapped up on the weekly chart, triggering a weekly High 2 buy signal. It also triggered a wedge bull flag buy signal on the daily chart.
However, it was a bull trending trading range day. It oscillated around the resistance of the 20 day EMA and 50 day MA on the daily chart. Traders are deciding if it will turn down from that resistance. More likely, it will continue up to around 3400, which was the start of the small wedge bear channel on the daily chart. But it might go sideways for another day or two as traders make up their minds.
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.
Emini 9/28: Why isn’t the big bear bar at 11.20 a sell? Good signal bar, micro DT, 3rd attempt to break above high of the day
It’s also a double/triple bottom in a tight trading range so you would need follow-through before selling. A potential trap.