Emini and Forex Trading Update:
Thursday September 19, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini sold off after the FOMC announcement yesterday to below Tuesday’s low. It then rallied to above Tuesday’s high. Yesterday was therefore an outside up day. That is a sign of strong bulls. Because of the 4 week rally, the odds favor a new all-time high within a few weeks.
Yet, there is still a wedge rally and a double top on the daily chart. Also, the Emini is at the top of a 2 year trading range. Furthermore, the ledge top at 2940 on the weekly chart is a magnet below. Finally, most days over the past 3 weeks have had a lot of trading range price action on the 5 minute chart. Consequently, while the Emini is working higher, it is not racing up. Also, because of the loss of momentum at resistance, there can be a strong reversal down at any time.
Overnight Emini Globex trading
The Emini is up 5 points in the Globex session. It therefore might gap above yesterday’s high. It is only 16 points below the all-time high. Therefore the bulls could easily make a new high today or tomorrow.
However, until there is a breakout, the bears can get a strong reversal down from a double top with the July high on any day. But yesterday’s late rally was in a tight bull channel. Consequently, the Emini will probably have to transition into a trading range for at least an hour before the bears can begin a bear trend.
As a result, the downside risk on the open is not great. The best the bears can probably get is a sharp pullback for an hour or so. However, if they get one, then they would have a better chance of a reversal down after a test back up.
What is most likely? The all-time high is major resistance and it is therefore a magnet. There is plenty of room for a continuation of yesterday’s rally up to that high. Yesterday’s momentum up was strong.
That makes an early bear trend unlikely. Therefore, the Emini will probably either have some resumption up on the open from yesterday or enter a trading range.
Since yesterday’s rally was extreme, many bulls will look to take some profits early today. That increases the chance of a trading range beginning within the 1st 2 hours. If there is a trading range, the bears would then have a better chance of a swing down. At the moment, today will probably be mostly sideways or up.
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 has a double bottom pullback buy signal. It is also a small higher low major trend reversal buy setup. Yesterday formed a micro double bottom with Monday’s low. Traders believe that the odds slightly favor at least a small 2nd leg up after the double bottom and last week’s big bull outside up bar. The targets are the August 26 and August 6 lower highs.
However, there is also a triangle over the past 6 days. Also, the chart has been in a tight trading range for 3 weeks. These are Breakout Mode patterns. There is therefore also close to a 50% chance of a bear breakout. If the bulls had a significant advantage, the chart would not still be sideways and below the EMA.
While the odds slightly favor a bull breakout, until there is a breakout, there is no breakout. The pattern is also a 3 week bear flag just below the EMA. In addition, there are measured move targets down around 1.08. There is a gap there as well, and therefore another magnet below.
Overnight EURUSD Forex trading
The EURUSD rallied overnight, reversing yesterday’s selloff. This is the 2nd reversal up this week from a 50% pullback from last week’s rally.
The overnight bull channel has had only small pullbacks, but it has only rallied 20 pips over the past 5 hours. The bull trend is therefore transitioning into a trading range. Consequently, the bears will begin to look for reversal patterns to sell for scalps.
Also, because of the loss of momentum, day trading bulls are now waiting to buy pullbacks instead of buying at the market. They are switching to scalping.
Can today break strongly above or below the 4 day tight trading range? Yes, and the potential for a big move up or down is real. But the probability is low given the loss of momentum over the past 5 hours.
Day traders are now scalping. They will only switch to swing trading if there is a big breakout. At the moment, today will probably remain in a trading range all 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. 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 rallied on the open, but reversed down from a wedge top just above last week’s high. Today is a sell signal bar for tomorrow. The bears want a reversal down from this double top. That would also create a bigger double top with the July all-time high. The bears will need several bear days before traders will conclude that a swing down has begun.
Tomorrow is Friday and weekly support and resistance will be important. This is particularly true in the final hour. The bears want the week to close below its open to create a bear bar on the weekly chart. However, the bulls would like a close at a new all-time high. That is unlikely after today’s 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 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.
