Emini and Forex Trading Update:
Wednesday March 3, 2021
I will update again at the end of the day.
Pre-Open market analysis
Yesterday was a bear inside bar on the daily chart. It is a sell signal bar for today. If the Emini forms a 2nd consecutive big bear day today, the probability of a 10% correction will be back to 60%, as it was on Friday’s close. But if today is a strong bull day, the Emini will be back to neutral and possibly bullish despite the Emini oscillating around 3900.
The Emini yesterday again failed at 3,900, as it has many times for the past month. As a general rule, if the market tries several times to do something and fails, it then often tries to do the opposite. Traders should know within a week if the Emini will rally to 4,000 or correct down 10% in March. After yesterday, the odds are back to slightly favoring the bears. But one big bull day closing above last week’s high, would flip them back again in favor of the bulls.
Overnight Emini Globex trading
The Emini is down over 10 points in the Globex session. It is below yesterday’s low, and yesterday was a sell signal bar on the daily chart. Today will probably trade below yesterday’s low, which would trigger the sell signal. But since the Emini is in the middle of the 6-day trading range, there might be more buyers than sellers below yesterday’s low. The 6-day trading range is neutral, which increases the chance of another sideways day. The recent ranges have been big, so if today is a trading range day, there should be at least one swing up and one swing down.
Everyone knows that the daily chart is in Breakout Mode. Traders are ready for several consecutive strong trend days in either direction. If there is a series of strong trend bars up or down in the 1st hour, the chance of a bull trend day will go up. But if there is a trading range open, traders know that today will probably be another trading range day.
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. Buyers of both the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).
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.
If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.
EURUSD Forex market trading strategies
The EURUSD Forex market on the daily chart has been in a trading range for 3 months. Every attempt to break out reversed, which is what happens in a trading range. The EURUSD is now at the bottom of the range. Traders hope that the 4-day selloff will lead to a successful breakout. They see yesterday as a pullback from the break below the January 1 low.
However, the bulls see yesterday as a failed breakout, and they are hoping for a reversal up to the middle or top of the range, over the next couple weeks. For them, the overnight selling is just a pullback from a 2-day rally.
Who is right? Both are. But until there are consecutive closes above or below the 3-month range, traders know that reversals and a continuation of the range is likely.
Overnight EURUSD Forex trading
The 5-minute chart of the EURUSD Forex market rallied above yesterday’s high, which triggered a buy signal on the daily chart. But there were more sellers than buyers above yesterday’s high. The EURUSD sold off sharply from a double top overnight. The selloff has been strong enough so that the EURUSD will probably not make a new high today.
As strong as the selloff has been, it is now at a 50% retracement of the 2-day rally. Also, the EURUSD is back in Friday’s trading range. That reduces the chance of the selloff continuing much lower.
Because the selloff was a strong reversal down, day traders have only been selling since the reversal down began several hours ago. But because it is a sell climax down to support, the bears will probably take profits and the bulls will start to look to buy reversals up for scalps.
Day traders will sell rallies all day. Once there is a 20-pip rally, day traders will begin to buy reversals up from the low. This is because they know that this selloff will probably evolve into a trading range within the next couple hours.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
I will post chart after the close.
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. Buyers of both the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).
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.
If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.
End of day summary
The Emini triggered a sell signal on the daily chart by trading below yesterday’s low. There was a triangle for the 1st half of the day and then a selloff into the close. Because there are again consecutive bear bars with good-size bodies on the daily chart, the probability that this is leading to a 10% correction is back to 60%. The bulls need consecutive strong bull bars to flip the probability back in their favor.
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.
Dear Al,
Emini, what is the reason to buy above a big bear bar 15 (blue border)?
Thank you.
The buy is above the bull bar just before it.