Emini and Forex Trading Update:
Wednesday November 13, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini yesterday accomplished the 2 goals that I said were likely. The bulls got a breakout above 3100 and above Thursday’s high. As expected, many bulls took some profits. There is now a micro wedge on the daily chart. The ingredients are here for a 2 week pullback. A 6th consecutive bull bar on the weekly chart would be unusual and therefore this week should close below its open.
I know some technicians are predicting a 7% correction. Of course, we’ll get one, but when? I think it is more likely that the Emini sells off for 50 – 100 points over the next 2 weeks and then gets back up to today’s high. At that point, the bears would have a better chance of a 5% pullback. This is because the bears will probably need a micro double top on the weekly chart before they can get a 5% or more correction.
Yesterday is a sell signal bar for today for a micro wedge top over the past 7 days. Since it had a bull body, it is a low probability sell signal bar. The bears might need a micro double top on the daily chart before they get their 2 week correction.
The bulls want a breakout far above 3100. Yesterday’s profit taking from just a little above 3100 make a big breakout unlikely until after more of a pullback.
Overnight Emini Globex trading
The Emini is down 10 points in the Globex session. There is now a credible top on the daily chart and a pullback is likely on the weekly chart. That increases the chance of more bear trend days. But for the past month, even trend days up and down have spend much of the time in trading ranges. However, there is now an increased chance of a big bear day coming at any point.
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.
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 Forex on the daily chart has continued down in a tight bear channel. It is now testing the October 15 higher low. The bulls want a double bottom with that low. A reversal up would be a higher low major trend reversal. Traders would look for at least a test of the October high.
But a tight bear channel typically needs a micro double bottom before there can be a reversal. Consequently, the best the bulls can probably do over the next few days is to stop the selling and begin a small trading range.
The bears want the bear trend to continue. That means they need a break below the October low. There are 2 measured move targets around 1.08 and a gap there as well. At the moment, a bounce is more likely within a couple weeks. Since the recent bars are small, and the chart is just above support, today will also probably be mostly another trading range day.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been in a 25 pip range overnight. Day traders are scalping reversals for 10 pips, as they have been doing for days. Until there is a strong breakout up or down, they will continue 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. 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.
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
The Emini had a bull trend resumption day. Today is a buy signal bar on the daily chart. However, a 1 – 2 week pullback should begin in November with the Emini falling at least 50 – 100 points. I doubt it will fall 8% without first forming a micro double top on the weekly chart. Also, remember that this week will still probably have a bear body on the weekly chart. Therefore, traders should expect a selloff to below the open of the week by Friday’s close.
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.
Just my 2 cents concerning bar 13
1) Bar 13 allowed STC bears from bar 4 to exit break even if they scaled in at bar 11. Bar 14 reversed exacly at the midpoint of STC bar 4 and STC bar 11
2) after a 7 bar microchannel (bar 5 to bar 11) expect a minor reversal.
3) trend line from low bar 1, low bar 5 to low bar 13
4) test of close of bar 2 BOP
This is hindsight, I got trapped as well.
Thanks Chaturoong Muedchai,
I completely missed “3) trend line from low bar 1, low bar 5 to low bar 13” perspective.
Thanks Al.
If possible please clarify.
Have a quick question on following.
bar 13 has many good reason to trigger sell:
1. bar 13 is a good looking bear signal bar
2. reverse below EMA
3. Double top opening reversal pattern.
4. bar 14 also went below low of 13 and triggered the sell below bear bar entry.
but bar 14 immediately reversed and trapped bears. I don’t see any good reason for bar 14 to reverse and trap bears. Can you provide more insight on this setup?
Another Question related to Failed BO above wedge top.
I wonder how come there is no sell entry in your chart for Failed BO above wedge top.
I see following reason to enter (stop) below BO bar.
1. it looks like bull spike (bar 25 to 27 ) and tight weak bull channel. As you mention in your course bull BO above bull channel has 75% chance of failure.
2. And also the BO is happening after 50 bar in a trend, so the probability of failure is high.
Once again thanks for the chart and your valuable insights.
I talked about 13 in the room. I said that there were only 2 bear bars in the 1st 10 bars and both 1 and 5 were unusually strong bull bars. When there is that much early buying, the best the bears can typically get is a trading range. In a trading range, traders need to sell high. Selling below 13 was too low. Also, I said I wanted to see follow-through selling because many bulls would buy the close of 13, betting it was a trap, and betting that the 2 legs up were strong enough to make a 3rd leg up likely. 15 was a strong breakout and that make traders think about a measured move up from above 11.
It is important to remember that any strong leg on the open has a 50% chance of quickly reversing. Furthermore, trend days usually do something early on to trap weak traders in and out. Here, it trapped bulls out and bears in.
If 13 was the start of a bear trend, there would be many opportunities to sell and they would have a higher probability. Therefore, waiting to see one more bear bar made sense. When traders sell a bar like that, they are not believing in a trend. They are afraid of a reversal and want to enter early to minimize risk. That should tell them that they should wait at least one more bar. They need to be confident that the market will go down, not afraid that it will reverse up. That is your radar telling you that you think the trade might be bad.
I am glad you find time to answer my question. Thanks for your answer Al. I like following statement from your answer.
“If 13 was the start of a bear trend, there would be many opportunities to sell and they would have a higher probability. Therefore, waiting to see one more bear bar made sense. “
excellent