Emini and Forex Trading Update:
Thursday April 16, 2020
I will update again at the end of the day.
Pre-Open market analysis
Yesterday gapped down and Tuesday therefore is a 1 day island top. The Emini will probably be in a trading range all year. Island tops and bottoms are common in trading ranges. They are minor reversal patterns. If today gaps up, yesterday would be a 1 day island bottom.
The Emini is still in a Small Pullback Bull Trend on the daily chart. Yesterday is a High 1 bull flag buy signal bar on the daily chart. The bulls will try to break above yesterday’s high to trigger that buy signal. They expect the rally to go at least a little more sideways to up to test the 50 day simple moving average before a selloff begins.
The selloff might begin in April. It might have begun this week. But if today breaks above yesterday’s high, yesterday will be just a one day pullback in a 3 week Small Pullback Bull Trend. The Emini will then try to reach the next resistance. That is the March 10 lower high and the 50 day moving average.
Above that is the March 3 high of 3125.75. The Emini will get there at some point within the next year because that was the start of the parabolic wedge selloff on the daily chart. That is a reliable magnet.
Overnight Emini Globex trading
The Emini is up 22 points in the Globex market. It is near yesterday’s high. Today will probably go above yesterday’s high. That will trigger a High 1 bull flag buy signal on the daily chart. It would increase the chance of this rally reaching the 50 day moving average, which is already likely.
It is important to note that the past 4 days have had mostly trading range price action. Unless there is a strong breakout up or down, day traders will expect more of that again today.
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 (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 has been in a trading range for 8 months. There is now a triangle after an expanding triangle. This is a diamond pattern. Any trading range is a Breakout Mode pattern. When the trading range is a triangle, a breakout attempt usually begins soon.
Most computers redrew the triangle today. They are now using the March 27 high as the 1st point of the bear trend line. This results in a more symmetrical triangle, which will make more computers watch for a breakout within the next week.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market had 2 legs down over the past 2 days following last week’s wedge top. That meets the minimum expectation for the bears. They bought back their shorts overnight when the EURUSD fell below yesterday’s low. The bulls bought as well.
The two lines of the triangle on the daily chart are converging and are now very close. That increases the chance of a breakout coming within the next week.
The breakout will be either a big bull or bear trend day. Until then, day traders will continue to look for reversals for scalps.
Since the daily chart is at the apex of the triangle, support and resistance are nearby. This results in smaller legs up and down and smaller scalps. Day traders are ready for a breakout and a big trend at any point soon.
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 (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 traded above yesterday’s high and therefore triggered the High 1 buy signal on the daily chart. It then had several big legs up and down and formed another trading range day. It is unusual for a day to have 4 trends like this.
The Emini managed to get back above yesterday’s high by the end of the day. That increases the chance of higher prices tomorrow.
The Emini has been sideways for 5 days in a tight range, oscillating around the 50% pullback level of the 2 month collapse. A breakout can come at any time, but markets have inertia. They are more likely to continue to do what they have been doing.
Tomorrow is Friday and the week so far is a doji bar on the weekly chart. This week has oscillated around the open of the week and the 50% pullback level. Both will be magnets tomorrow, especially in the final hour. However, the Emini is still in a bull trend on the daily chart. That increases the chance that the week will close near its high.
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.
Well, Al, we skipped a few days and simply opened with a GU at the March 3 high. But it’s still not done breaking through, next target the start of the sell climax?
If this is “buy the news” I wonder what would make the market “sell the reality” in order to go test the April 1 low, since markets are currently not driven by fundamentals, but by emotions?
With the rally as strong as it has been, I don’t think it will test the April higher low for several months. But the Emini is still in its 2+ year trading range. It will have a bear leg soon. I will write about this in my weekend update.