Intraday market update: Monday April 1, 2019
I will update again at the end of the day.
Pre-Open market analysis
On the monthly chart, the Emini has rallied for 3 months. But, the bodies have been shrinking, which indicates a loss of momentum. March had a relatively small range and small body. It therefore increases the chance of a sideways month in April. A sideways month might test last month’s high and low. The low is about 100 points down from the March close. Consequently, there is an increased chance of a 100 point selloff over the next few weeks.
On the weekly chart, last week was a pullback bar in a bull trend. Because it closed with a bull body, it is a buy signal bar. Since there is a 3 month bull trend, this week will probably have to go above last week’s high to trigger the buy. Traders will want to find out if there are buyers or sellers up there.
The weekly chart is still on a sell signal from 2 weeks ago. Both the daily and weekly charts have buy climaxes at the 2825 resistance area. The bulls want this rally to make a new all-time high without more than a minor pullback. It is more likely that there will be a 2 month sideways to down move beginning either with March or April.
Overnight Emini Globex trading
The Emini is up 20 points in the Globex session. Today will therefore probably gap up on both the daily and weekly charts. If today trades above Friday’s high, which it would with a gap up, it would trigger a buy signal on the weekly chart.
If this week rallies above the high from 2 weeks ago but reverses down, the daily chart would have an expanding triangle top with the March 4 and 21 highs. The bulls need 2 closes above the March 21 high to make a new all-time high likely within the next 2 months.
A big gap increases the chance of a trend day. A gap up makes a bull trend slightly more likely than a bear trend. However, there are bears who will sell around the high from 2 weeks ago. They expect a swing down for a couple of months and are going to sell rallies. We do not know yet if there are more of them than there are bulls wanting a new all-time high.
The past 5 days have had swings up and down. On the daily chart, each has had prominent tails, which indicates the reversals. While today has an increased chance of being a trend day, it is still more likely to have at least one swing up and one swing down.
A big gap up typically results in a trading range for the 1st hour. Day traders look for a double top or bottom, or a wedge top or bottom, and then a 2 – 3 hour swing up or down. That swing can continue all day.
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. 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 traded above Friday’s high. This therefore ended the 8 day bear micro channel. However, the bulls might need a micro double bottom before they can begin a 2 week leg up in the 4 month trading range. A reversal up would form a double bottom with the March low. Every leg up and down, no matter how strong, reversed within a few weeks. Therefore, a reversal up is likely within a week or so.
The bears have a double top. They see the 8 day selloff as the start of a bear trend. If they get 2 consecutive closes below the March 7 neck line of the double top, traders will conclude that a breakout is finally underway. They would look for about a 250 pip measured move down.
Traders are waiting for news from Brexit. There have been several deadlines, and they keep creating new ones. That news could be the catalyst that finally converts the 4 month trading range into a trend up or down.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been in a 30 pip range overnight. While today broke above Friday’s high, there so far have been more sellers than buyers up there. Traders are deciding if the 8 day bear micro channel needs a micro double bottom before a swing up can begin. Day traders are scalping, waiting for a breakout up or down.
On the 4 hour chart, the past 4 days created a channel in a Spike and Channel bear trend. The huge selloff on March 22 was the spike. A bear channel is a bull flag. There is a 75% chance of a break above the bear trend line. That typically converts the bear channel into a trading range. The top of the range is often the start of the channel. That is the March 25 high of 1.1333.
However, the channel could easily continue to below the March low before reversing up. There have been many failed breakouts up and down over the past 4 months.
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. 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
By gapping above last week’s high, the Emini triggered a weekly buy signal. It also traded above last month’s high. The day was in a weak bull trend until the middle of the day. At that point, the trend became stronger. It closed at the high of the day, well above the March high.
However, the bulls need consecutive closes above that high. That would make traders more confident that this rally will reach the all-time high without first having a 1 – 2 month pullback.
The bears will try to begin a reversal down this week. But, there is no top yet. The bears will probably need at least a micro double top. Consequently, they 1st have to stop the buying before they can begin the selling. That means they will need at least a few sideways days before traders will look to sell on the daily chart.
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.
Al, I noticed on your review chart that B8 was not marked as a sell (2nd failed BO yest H + potential DT). Could you explain your thoughts why/why not?
Thanks!
I wont sell b8, cause it’s still under the buy of huge 7. big up big down and trading range probably. if you sell below b8, u are selling in the middle of the range and probably buyers below. wont feel comfortable and need more good bear bars.
I understand your thoughts. Remember though that trading is always relative. This could have just as likely been a gap up, DT, 2nd entry fbo. Buyers who bought close of B7 (or anywhere during B7) were likely disappointed by B8. Al mentions he likes DT reversals on gap days, just wondering his thoughts. Thanks for your input!
I talked about it in the room. A big bar has big risk so bad risk/reward. Selling in the middle of a trading range and above the bottom of the strong leg up has low probability. I said that a stop entry setup with low probability and bad risk reward is usually a limit order buy setup.