Emini and Forex Trading Update:
Monday November 25, 2019
I will update again at the end of the day.
Pre-Open market analysis
Friday triggered a High 1 bull flag buy signal on the daily chart. But Thursday was a bear bar and the 3rd consecutive bear bar. This was a low probability buy setup and there probably will be more sellers than buyers above Thursday’s high and above the all-time high.
Furthermore, the Emini broke below the 7 week bull channel last week. Traders should expect at least a small 2nd leg down.
Finally, last week was the 1st bear bar in 7 weeks on the weekly chart. While last week is not a strong sell signal bar, it probably will lead to at least one more week of sideways to down trading. If there is a new high, it will probably be brief and lead to a 2 week pullback shortly thereafter.
Most of the days for several weeks have had at least one reversal. Day traders will expect that again today. Because of the buy climaxes on the daily and weekly charts, there is a slightly increased chance of a strong bear trend day this week. However, since it is a holiday week, there is a greater chance of lots of tight trading range price action.
Overnight Emini Globex trading
The Emini is up 7 points in the Globex session. It will therefore probably gap above Friday’s high. Traders are deciding if there will be a 2nd leg down after the bears broke below the bull trend line last week. Since the 7 week rally has been so strong, there is a 50% chance of a 1 – 2 week new high before a 100 point pullback.
Today is the 1st day of a holiday week. Also, the past 6 days had small ranges and were trading range days. Day traders expect another trading range day today.
But whenever something is especially likely, there is always an increased chance of the opposite. Consequently, if a Small Pullback Trend up or down begins to form, day traders will swing trade.
Friday’s 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. 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 daily chart of the EURUSD Forex market is in the middle of a 4 month trading range. Trading ranges always have both buy and sell setups. The bulls hope that last week selloff will form a double bottom with the November 14 low. A reversal from there would create a head and shoulders bottom where the right shoulder is a double bottom.
Additionally, there would be a double bottom higher low major trend reversal. The 1st higher low in a bull trend often forms a small double bottom. But the bulls need a reversal up this week if they are going to create the double bottom.
Alternatively, the bulls will try to create a double bottom with the October 1 low. If the EURUSD falls below that low, the bulls would then try for a reversal up from a lower low. That would be an expanding triangle bottom with the September 3 and October 1 lows.
As you can see, there are many ways for a reversal up. But the bulls need to create a strong buy signal bar. Even if they get their reversal, it will be within a trading range. The rally would more likely just be a 2 – 4 week leg in the trading range than an actual reversal into a bear trend.
The bears know that every new low for 2 years reversed up within a week. However, as long as they keep making new lows, the 2 year bear trend is intact. That will encourage them to sell every 2 – 3 week rally, expecting another new low.
What is most likely over the next month? A continuation of the 4 month trading range, even if there is a brief breakout below the October low.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market sold off overnight to below last week’s low. It therefore triggered a minor sell signal on the weekly chart.
However, the overnight range is only 25 pips so far. That is not a strong bear breakout. Furthermore, the range has only been 10 pips for 5 hours. Scalpers cannot even make a 10 pip scalp.
While it is always possible that there will be a trend, the lack of energy makes a trading range day more likely. Also, the selloff is stalling just above the support of the November 14 low. That further makes a big move today unlikely.
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
After a gap up and strong early rally, the Emini entered a trading range. That is what typically happens. The bulls got some trend resumption up at the end of the day.
There is no top yet on the daily and weekly charts. But both are in buy climaxes and last week had a bear bar on the weekly chart.
When there is a bear bar late in a buy climax and then a new high, there is usually a pullback within a couple weeks. However, the best the bears will probably get is a 50 – 100 point pullback for their first time down.
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.
