Emini and Forex Trading Update:
Thursday March 4, 2021
I will update again at the end of the day.
Pre-Open market analysis
The Emini triggered a sell signal on the daily chart when yesterday fell below Tuesday’s low. With 2 more consecutive bear bars with good-size bodies on the daily chart, the odds are back to 60% that a March 10 percent correction is underway. The bulls need consecutive strong bull days to flip the odds back in their favor.
Because the Emini is still in a trading range, it could continue sideways for another week or two. But look at the 10% reversals in September and October. They stalled only for a week or so before falling 10%. Traders should expect lower prices, even if the Emini goes sideways this week. A big bear day today will convince traders that the Emini will go down to at least the November 9 high at around 3,650. But with the Emini at the bottom of a 7-day trading range, and yesterday’s selling being climactic, there is an increased chance that today will be sideways to up.
Overnight Emini Globex trading
The Emini is down 2 points in the Globex session. If today gaps down, the gap should be small. A small gap typically closes within the 1st hour.
Yesterday’s selloff lasted more than 50 bars, which is extreme. It will probably attract some profit taking this morning. That should result in at least a couple hours of sideways to up trading, that starts by the end of the 2nd hour.
What happens if today gaps down 10 points, and sells off from the open? Traders would expect a bear trend day and lower prices tomorrow. With the Emini at the bottom of a 7-day tight trading range, and having consecutive big bear days, today will probably not be a 3rd big bear day.
Can today reverse up strongly, like it has done twice in the past 7 days? Yes, but it probably will not. Traders are likely becoming resigned to the Emini selling off for a month or two, and the bulls being less eager.
So if today probably will not be a big bear day or a big bull day, what will happen? Confusion and exhaustion usually results in a neutral day. There will probably be at least one swing up and one swing down, and a lot of sideways trading.
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 is at the bottom of a 3-month trading range. All trading ranges always have a buy and sell setup, but most fail. Trading ranges are more likely to reverse than break out.
The bears see yesterday as a pullback from the break below the February 17 low. It was a Low 1 sell signal bar, and today triggered the sell signal, when it traded below yesterday’s low.
The bulls are hoping that yesterday, and today, are forming a pullback from the reversal up 2 days ago. They want today or tomorrow to reverse back up, which would create a micro double bottom with Tuesday’s low.
What is most likely? More sideways. Even if the EURUSD falls below the February 5 low, it is still more likely to reverse than continue down. Until there are consecutive closes above or below the range, traders will continue to bet on reversals.
Overnight EURUSD Forex trading
The 5-minute chart of the EURUSD Forex market has been selling off in a broad bear channel since yesterday’s high. That is a weak bear trend, and there have been 3 trading ranges so far. It is always easier to make money selling in a bear trend, but when there are 20-pip bounces, like in this one, bull scalpers will buy reversals up from new lows.
The EURUSD is again testing the January 1 low. The bulls want today to close at least 20 pips above that low, to increase the chance of a reversal up tomorrow. If the bulls can get it to close near the high, today would be a buy signal bar for tomorrow.
But if the bears can get today to close on its low, tomorrow will probably trade at least a little lower.
So far, today has had many small reversals. There is not a sense that the price is terribly wrong, and that the market has to quickly move to a better price. Unless there is a series of strong trend bars up or down, which is unlikely, today should continue as a scalping 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
The Emini rallied from a parabolic wedge selloff on the open. It then reversed down from a wedge rally to a higher high double top.
The selloff was extremely strong. It closed the gap below the February 2 low and fell below last year’s close. The selloff should drop below the November 9 high at a minimum within a couple weeks.
Because the Emini is so oversold on the daily chart, it could bounce for a few days along the way. However, traders should sell rallies. The Emini will probably be sideways to down for at least a month, and it should fall about 10% and maybe more.
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.
