Emini and Forex Trading Update: <br />Friday April 5, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini formed an inside day yesterday. It is therefore both a buy signal bar and a sell signal bar. The bulls want a test of 2900 and then a continuation up to a new all-time high. Yesterday had a bull body and the Emini is in a bull trend. It is therefore a better buy setup than sell setup.
Since this 3 month rally is climactic, the bears want a reversal down. However, until there is a big bear trend bar on the daily chart, the bulls will continue to buy every 20 point selloff.
Today is Friday so today will determine how the weekly chart will look. The momentum up has been strong for 3 months and there is no clear top yet. Therefore, the bulls will try to get the week to close near its high. If they are successful, it will increase the chance of a new all-time high within a couple months.
The bears always want the opposite. If they can get a big selloff today, the week could close near its low. It might then be a good sell signal bar for next week. The selloff might come in the final hour. At the moment, the odds favor the bulls and higher prices.
Overnight Emini Globex trading
The Emini is up 7 points in the Globex session. It is close enough to the 2900 Big Round Number to get there today. Because that is a magnet and the momentum up has been strong, there is an increased chance of a swing up today.
However, yesterday was in a bull channel for the 2nd half of the day. A bull channel is a bear flag. There is a 75% chance of a break below yesterday’s bull trend line today. That does not require a bear trend. If the Emini simply goes sideways for a couple of hours, it will break below the bull channel. The bull trend would then have evolved into a trading range.
Most days over the past week have had at least one swing up and one down. Consequently, that is likely again today.
What is most important today is the appearance of the weekly candlestick once today closes. Therefore, there is an increased chance of a surprisingly big swing up or down in the final hour.
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. 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 an inside day so far today. In addition, yesterday was an inside day. Consecutive inside days is an ii pattern. It is a neutral and therefore Breakout Mode setup. If you look at a smaller time frame, you will see that an ii pattern is a triangle.
The bears see yesterday as a Low 1 bear flag. If today remains an inside day, the ii will be a bear flag for Monday. However, the bear flag is at the bottom of a 4 month trading range. Therefore, a bear breakout of the flag will probably fail.
For the bulls, they see the ii as a test of Tuesday’s low. Yesterday was therefore a micro double bottom. They want a rally back to the top of the 4 month range.
A Breakout Mode pattern is neutral
A Breakout Mode pattern is neutral. The breakout is as likely to be up as down. Furthermore, there is a 50% chance that the initial breakout will fail.
Traders are waiting for information about Brexit. It is foolish to have a strong conviction either way when the chart is telling us that the market is neutral. Until there is a breakout of the 4 month range, the odds continue to favor reversals.
But, this is the longest trading range in 2 years. The breakout will likely be within a month.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been in a small range overnight. This is obviously true, given that today is the 2nd consecutive inside bar.
Yesterday is a bear inside bar in a 10 day bear trend. The bears want to break below its low to trigger a sell signal today. However, on the daily chart, yesterday had a big tail below and it is at the bottom of the trading range. This is a low probability sell setup. Consequently, there are probably more buyers than sellers below.
Yesterday formed a micro double bottom with Tuesday’s low. It is therefore also a buy setup. But, with a bear body, it is a weak buy setup. Also, it is just below the resistance of the 20 day EMA. There are probably more sellers above than buyers.
With sellers above, buyers below, and no news on Brexit, today will probably be another scalping day for day traders.
Everyone knows that a surprise from Brexit is going to come soon. That will probably lead to the start of a trend lasting at least a couple of months. In the meantime, day traders will look to scalp reversals and small breakouts.
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. 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
After a gap up and brief early rally, the Emini entered a tight trading range. The day remained small, but closed near its high. This increases the odds of higher prices next week.
The weekly chart had 2 sell signals over the past 5 weeks. This week broke above both top attempts. Since the week closed near its high, the Emini will probably break above 2900 next week and test the all-time high within a month.
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.
