Emini and Forex Trading Update:
Wednesday March 17, 2021
I will update again at the end of the day.
Pre-Open market analysis
The Emini formed a small bear doji bar yesterday. This is an Emini Low 2 top with Thursday’s high. The bears see it as a 2nd failed breakout. But the 9-day bull channel is tight, the sell signal bar is small with a prominent tail below, and the 4,000 Big Round Number is a strong magnet above. That makes only a minor reversal likely. Traders should expect maybe a couple days of sideways to down trading, and then another attempt to break above 4,000.
Because the Emini is so overbought on the daily, weekly, and monthly charts, there is a slightly increased chance that this could be the start of a 10% correction. However, when the bull channel has been tight and there is a magnet just above, traders expect that there will be buyers not far below today’s low.
Overnight Emini Globex trading
There will be an FOMC announcement today at 11 am PST. Day traders should exit positions ahead of the report, and wait at least 10 minutes afterwards before resuming trading. This is because there is typically a brief sharp move up and down just after the report, and that makes it easy to lose money in those 1st 10 minutes. Also, an FOMC report sometimes leads to a big trend, and it can be up or down.
The Emini is down over 18 points in the Globex session. It therefore might gap below yesterday’s low. That would trigger the Low 2 top sell signal on the daily chart. However, it the gap is small, it will probably close in the 1st hour.
Even though the Emini has rallied strongly for 9 days, there has been at least one swing up and one swing down every day. Day traders will expect that again today. But if there is a series of strong trend bars up or down in the 1st hour, there will be an increased chance of a trend day. Because of the 11 am PST FOMC announcement, day traders should look at today as 2 separate days. Whatever happens after the report is not highly correlated with what happens before. They should be open to anything after the report. That includes a trend, a reversal, or a trading range.
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. 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 triggered a Low 2 bear flag sell signal yesterday when it traded below Monday’s low. However, yesterday was a small bear bar with a big tail below. That means there was hesitation. This is so far a weak bear breakout. Also, the context was bad. While the EURUSD had been in a bear trend since January 6, it reversed up last week from a wedge bottom.
There were 3 consecutive bull bars closing near their highs. Traders know that usually will lead to a 2nd leg sideways to up. Consequently, many bears are not eager to sell yet, because they expect at least one more leg sideways to up. However, if there is a surprisingly big bear bar today or tomorrow, they will conclude that the bear trend is resuming and they will begin to sell again.
Since the March 9 sell climax was extreme, and it came in a 3-month bear trend, there is an increased chance that the short covering could last a couple weeks and reach the March 3 top of the most recent leg down. However, this 3-month selloff is coming from a clear wedge top on the weekly chart. Therefore, even if the EURUSD rallies from here, the odds still favor a continuation down to the November 4 higher low at some point in the next few months.
There is an FOMC announcement today at 11 am PST. It sometimes leads to a big move in either direction, and there is usually a sharp move up and down within the 1st few minutes after the announcement. Day traders should exit positions ahead of the report, and wait at least 10 minutes afterwards before trading again.
Overnight EURUSD Forex trading
The 5-minute chart of the EURUSD Forex market has been in a tight trading range overnight. It has been difficult for day traders to make even 10 pips on their scalp attempts. They will continue to scalp reversals in both directions, unless there is a series of strong trend bars in either direction.
The bears want today to close below the open. Today would then be a 4th consecutive bear day on the daily chart. That would increase the chance that the bear trend is resuming.
The bulls want a 2nd leg up on the daily chart. They need to get strong bull bars to encourage traders to buy. They therefore want today to close near the high of the day.
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 was an FOMC day and therefore traders trade it like 2 separate days. The began with a wedge rally to the EMA. It reversed up from a wedge bottom and a failed breakout below a double bottom, and it then entered a triangle going into the FOMC report. It broke strongly to the upside and broke above yesterday’s high. Today was an outside up day and a new all-time high. Traders still expect it to get closer to 4,000 within a week, and possibly above that Big Round Number.
The bears want a reversal down, but they need to get some strong bear bars. Without that, traders will buy every 1- to 3-day selloff.
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.
