Emini and Forex Trading Update:
Monday November 18, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini formed its 6 consecutive bull bar on Friday. That is extreme and therefore climactic. Furthermore, there have been 3 pushes up in a tight bull channel on the daily chart. A reversal down this week will be from a parabolic wedge buy climax.
Friday closed slightly above the top of the yearlong bull channel on the weekly chart. There is no reversal down yet and therefore the Emini will probably trade at least a little higher this week. However, Friday was a big day and it therefore was climactic. The bears will try to create a bear bar early this week, hoping for the start of a 1 – 2 week pullback.
The rallies on the daily and weekly charts are strong. Consequently, the bears will probably need at least a micro double top on the weekly chart before they can test the bottom of the channel at around 2930. Therefore, traders will buy the 1st 1 – 2 week pullback. However, the rally has been in a buy climax and it has reached reliable resistance. Traders should expect a 1 – 2 week pullback to begin by the end of the month.
Overnight Emini Globex trading
The Emini is down 1 point in the Globex session. Because there is a potential parabolic wedge on the daily chart, the bears want a credible sell signal bar early this week. They need a day closing on or near its low. That can come from either a bear trend day or from an early rally that reverses down. Day traders therefore should be looking for a possible swing down today.
While the Emini reached the top of the bull channel on the weekly chart, there are bull channels on the daily and monthly charts as well. Their tops are above last week’s high. Traders know that there could be a blow-off top over the next couple weeks. That means there is an increased chance of several more consecutive bull trend days.
With the Emini in a buy climax at major resistance, there is an increase chance of one or more big bull or bear trend days.
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 had a buy signal bar on Friday. There is a double bottom with the October 15 low. However, the 2 week bear channel was tight. That usually means that the 1st reversal up will be minor. The bulls may need a small double bottom before they can get a rally back up to the October high.
The bears hope that the 3 day rally will be a bear flag. They want a breakout below that October low. That would indicate that the 2 year bear channel is still in effect. There are measured move targets and a gap around 1.08, and therefore there is a magnet below.
What is most likely? Confusion. The EURUSD is in the middle of a 4 month trading range. Traders expect legs up will disappoint the bulls and legs down will disappoint the bears. They know that reversals are more common than successful breakouts. There will probably be buyers below the October 1 low of the range and sellers above the October 21 top of the range. Since last week’s bottom will probably be minor, traders expect a sideways week.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market has been in a small range overnight. There has been no follow-through buying after Friday’s bull trend day.
This is typical when the daily chart is in a trading range. If the bulls get a big bull bar on the daily chart, traders will conclude that the rally will continue up to the October 31 high. More likely, today a small, trading range day.
If today sells off and closes on its low, today will be a sell signal bar on the daily chart. The bears will try to get a break below last week’s low and then below the October low.
When there is a weak buy setup in the middle of a trading range, the chart usually has to go sideways for a few days. Many traders wait for a 2nd signal on the daily chart, like a small double bottom or double top.
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 went above Friday’s high and therefore formed another new all-time high today. Today was the 7th consecutive bull bar on the daily chart and there is room to the top of the daily and monthly bull channels.
The 7 week rally is in a tight bull channel. Furthermore, there have been 3 legs up. This is a parabolic wedge buy climax, which typically attracts some profit-taking. Consequently, traders should expect a 1 – 2 week pullback to begin by the end of the month.
However, the bull trend on the weekly chart is strong. Therefore, traders will buy the pullback.
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.
I wasn’t in trading room today. Al, did you consider today a trending TR day? If so, do you consider a test of yesterday’s close EOD since it was an important price earlier in day? A lot of your study material considers open of day to be important…but in today’s context just wondering if yesterday’s close would have had more relevance. Thanks
Yes, I thought that yesterday was a trending trading range day. That late selloff was a test of many things, including yesterday’s close. I thought the most important factor was the close of 16 because that is where traders decided that the bulls were clearly in control.