Emini and Forex Trading Update:
Monday April 26, 2021
Pre-Open market analysis of daily chart
- Emini loss of momentum despite Friday being a big bull bar, and new all-time high. Bulls not as strong as they could have been with close below Friday’s high.
- Friday tested top of 9-day tight trading range.
- Bears want reversal down from double top, but will need bear sell signal bar before reversal down.
- Streak of 13 consecutive bull bars that ended 2 weeks ago makes it difficult for the bulls to continue much higher without a 10% pullback.
- Probably will soon enter a trading range for a couple months.
- Last week was the 5th consecutive bull bar on the weekly chart, which is unusual. That increases the chance that this will close below the open of the week, which is today’s open.
- This is the final week of April and the bulls want another month closing near its high.
- Before any bar closes, there is often a sharp move up or down, that changes the appearance of the bar once it closes. Increased chance of a surprisingly big, quick move toward the end of the week, especially in the last hour on Friday.
Overnight Emini Globex trading on 5-minute chart
- Up 10 points in the Globex session. If today opens here, it will be within the trading range that began after the 3rd hour on Friday.
- Friday was a buy climax day, so there is only a 25% chance of another strong bull trend day today.
- If today is a bull trend day, it will probably be weaker, like a bull channel or a bull Trending Trading Range Day.
- 75% chance of at least a couple hours of sideways to down trading, that starts by the end of the 2nd hour.
- Since increased chance of trading range day today, day traders will look for reversals.
- Most days have at least one swing up and one swing down, even if trading range day.
- If series of strong trend bars up or down in 1st hour, then increased chance of trend day.
- Strong bull trend day is unlikely, since Friday was a buy climax at the top of a 2-week trading range.
- Unlikely to be a big bear trend day since Friday was strongly bullish for most of the day.
Friday’s Emini 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. 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
EURUSD Forex daily chart
- On the weekly chart, last week was the 3rd consecutive big bull bar closing near its high. That increases the chance of higher prices this week.
- On daily chart, Friday closed above April 20 high, which was the top of a small parabolic wedge.
- There are at least 2 ways that the Small Pullback Bull Trend can be seen as a wedge, which should attract some profit taking.
- If the bulls get a bull day today, especially a big bull day closing on its high, traders will expect this rally to continue up to the February 25 high. Even a small bull body increases the chance that the EURUSD will go higher.
- If the bears get a bear reversal bar closing on its low today, traders will conclude that Friday’s breakout failed. They will then look for a reversal down for a couple weeks.
- Since the April rally is in a 9-month trading range, it is more likely to pull back soon than to break above the January 6 high.
Overnight EURUSD Forex trading on 5-minute chart
- Rallied above last week’s high (Friday’s high) and reversed down.
- The bears do not need the selloff to continue, because today is already a good bear reversal bar on the daily chart.
- Bears need the day to close near its low, which is where the EURUSD currently is. If it does, today will be a good sell signal bar, for a failed breakout into the December/February upper trading range.
- Bulls want a bull body today. That means a close above the open of the day.
- A bull bar on the daily chart would be a bull follow-through bar after Friday’s bull breakout.
- A bull follow-through bar after a bull breakout increases the chance that the breakout will be successful. It would be a possible measuring gap for a test of the February 25 high.
- Even though today so far is a bear reversal day, the selloff was not particularly strong.
- Also, the bulls have been strong for 3 weeks.
- Unless the overnight bear trend accelerates down, the bulls will look to buy a reversal up.
- The bulls do not need today to close on its high. They only need a close above the open. The open is only 15 pips above the current price.
- Since neither the bulls nor the bears need a big move from here, there is an increased chance that the EURUSD will be in a trading range for the remainder of the session.
- Unless there is a series of strong trend bars up or down, day traders will look for reversals to scalp.
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. 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
- Today began with small double bottom at the EMA, but the buy signal bar had a tail. That made a minor rally and trading range open likely.
- The bears got a lower high double top but with bull bars for sell signal bars, which made a trading range likely.
- The bulls got a reversal up from a double bottom test of the open. The 2nd bottom was also the 3rd leg down from the high. This was therefore a truncated wedge bottom.
- There was a Bear Surprise down from a new high and it led to a new low. It was a bear trap and another test of the open.
- Today closed just below the open and formed a bear doji inside bar on the daily chart.
- The Emini might go sideways into Wednesday’s 11 am PT FOMC announcement.
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 Time
When I mention time, it is USA Pacific Time (the Emini day session opens at 6:30 am PT, and closes at 1:15 pm PT). You can read background information on the intraday market reports on the Market Update page.
When swinging a long above B6, for management, is it generally always a good idea to manage stop 2pts below bull B9 or 1tick below bear B15…primarily if you think only a minor reversal possible? Thanks
This question comes up regularly and it has to do with risk. If a person is good at re-entering, he can rely on a tight stop, like 1 tick below a bear bar closing below its midpoint or a point or two below any bar, depending how big the bars are.
If he finds he too often never gets back in and his biggest profits are all small, he is better off trading a small position and keeping a stop below 5. Wider stops always have higher probability. If he did, he might exit below 24 since that was a credible sell signal. He could even reverse there.