Emini and Forex Trading Update:
Wednesday September 4, 2019
I will update again at the end of the day.
Pre-Open market analysis
Yesterday sold off early, but the day formed a trading range. It closed above the open after a 2 day selloff. It is therefore a buy signal bar for today. However, it was a doji day, which is a weak buy signal bar. Also, it is in the middle of its 5 week range so the context is not strong for the start of a trend.
But the ledge at the top of the 5 week trading range is a strong magnet above. A ledge top is 4 or more bars with almost exactly the same high. Consequently, the odds favor at least a brief bull breakout. Therefore, the odds favor higher prices over the next week.
It is important to remember what I have said several times over the past few weeks. Even though a move above 2944.25 is likely, there is still better than a 50% chance of a reversal down from failed breakout. Traders should still expect a move to below 2800 unless the bulls get 2 or more closes above the month-long trading range.
Overnight Emini Globex trading
The Emini is up 26 points in the Globex session. There will probably be a big gap up. There is only a 20% chance of either a bull or bear trend from the open when there is a big gap up.
A big gap up typically leads to a trading range for the 1st 1 – 2 hours. The bulls will look to buy a double bottom or wedge bottom near the EMA. However, the bears want a double top or wedge top and a swing down.
I have been saying that traders should expect a breakout above the 2944.25 ledge top. The Emini is currently only 12 points below. Consequently, the bulls will probably get their breakout today or tomorrow.
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 daily Forex chart reversed up yesterday from the bottom of a wedge bear channel that began in November 2017. Today is the entry bar and it is a big bull bar so far.
The bulls want this to be a climactic bull trend reversal. They hope that the selloff was simply a sell vacuum test of the bottom of the channel.
The reversal is similar to the August 8 bottom. The bulls are hoping that it continues, like the climactic reversal in the stock market after Christmas 2018. They need several consecutive bull trend bars to convince traders that the rally will last 3 or more weeks.
The bears know that, and will try to prevent 3 or more bull bars from closing near their highs. They will try to form a lower high around the EMA.
Importance of the August 1 low
The minimum goal for the bulls is to get at least 1 pip above the August 1 low of 1.1027. That is the breakout point. Bulls who bought there and scaled in lower want to exit their 1st buy there at breakeven. Many will take profits on their lower purchases there.
In addition, the bears know that bulls will sell there, so they might sell there as well. It is therefore a resistance zone for today and tomorrow.
How the chart behaves there will be an indication of what to expect over the next few weeks. The more the hesitation, the less rally will be likely.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart continued yesterday’s rally over night. It has been in a 15 pip trading range for the past 4 hours. That is not yet enough selling for day traders to short. They are continuing to buy dips.
The trading range means that they are now mostly scalping. The bears will initially look to sell below a strong bear reversal bar at the top. Their first trades will only be scalps. Because the selloffs have been less than 15 pips, the odds are against a pullback growing to more than 20 – 30 pips today.
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 gapped up and sold off on the open. That was a bear trap and it then trended up, but spend much of the day in tight ranges.
That ledge top is still a magnet just above. Traders should expect a breakout above 2944.25 within a few days and then a pullback below. The breakout will likely be at least 20 and maybe 50 points, The downside is therefore small for the next couple days.
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 Intraday Market Update page.
