I will update again at the end of the day.
Emini and Forex Trading Update:
Tuesday September 10, 2019
Pre-Open market analysis
Yesterday reversed down from above Friday’s high and then up from below Friday’s low. It was therefore an outside down day. Furthermore, it again tested the July 18 low, which was the neckline of a double top on the daily chart. Also, it was an important magnet on Thursday and Friday.
Traders are still deciding if the June/July bull trend is resuming. Unless there is a breakout to a new all-time high, there is a 50% chance that this rally will form a lower high. The target for the bears is the bottom of the August trading range and down to the June low around 2700.
I mentioned last week that there is an increased chance of an island top this week because of the uncertainty surrounding the breakout. Any gap down this week would create an island top with Thursday’s gap up. Most island tops and bottoms are minor reversal patterns. But the context in this case increases the chance of a possible swing down.
Overnight Emini Globex trading
The Emini is down 5 points in the Globex session. It therefore might gap below yesterday’s low. If it does, there will be a 3 day island top on the daily chart.
However, if the gap is small, it will probably close in the 1st hour. But, if there is a gap down and an early strong selloff, today could be the start of a swing down for several weeks.
More likely, the 3 week rally will 1st test 3,000 before the bulls will give up. After 3 trading range days, traders will expect another trading range day today. They will switch to swing trading if there is another strong breakout up or down, like they did for 40 minutes yesterday.
Since the bulls have been in control for 3 weeks, they will try to continue the rally to above 3,000. They would like today to be a buy signal bar for tomorrow. They will try to get today to close near its high. For example, if today is a bull inside day closing near its high, today will be a bull ioi buy signal bar on the daily chart for tomorrow.
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 been sideways for 4 days just below the EMA. It reversed up for 3 days last week from the bottom of 2 bear channels.
The rally had only one big bull bar closing near its high. It was strong enough for traders to expect at least a small 2nd leg sideways to up. Yesterday met that minimum goal. Consequently, the bears will be more willing to sell again.
There is now a micro double top. The bears see the rally as a bear flag at the EMA. If today has a bear body, today will be a sell signal bar for a micro double top and bear flag at the EMA. A big bear body and a close near the low of the day today will make more bears willing to sell tomorrow below today’s low.
The bulls know that, and they therefore will try to prevent today from closing on its low. Furthermore, they want today to close on its high and above the EMA. If they achieve their goal, traders will believe that the 2nd leg up from last week’s rally will reach the August 26 lower high.
Since the rally only had one strong bull bar, it is more likely that there will be a test back down within a few days. The bulls will then try again to get a 2nd leg up, but from a higher low.
The bears want a reversal down to a below the September low. Traders should expect a test down to a higher low within a few days and then another attempt at a 2nd leg up.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart so far has only had a 30 pip range overnight. It is also an inside bar and the 4th day in a tight trading range. Day traders have been scalping for 4 days as they wait for a breakout up or down. A downside breakout is slightly more likely, but it would probably form a higher low on the daily chart around the September 3 reversal bar’s high.
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 had a sell climax on the open. It rallied from a higher low major trend reversal. Once it got to the July 18 low, it reversed back down from a wedge top. At the end of the day, it rallied again from a wedge bull flag. Today was a bull bar on the daily chart and it is therefore a High 1 bull flag buy signal bar for tomorrow.
However, today was the 4th consecutive trading range day after last week’s gap up. There will probably be a pullback to below the wedge top on the daily and weekly charts within a week.
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.
Hi Al,
If a trader ends up finding a PA strategy that works around 70% of the time at a 1:1 RR, should the trader just stick to that for the rest of his/her career and keep things simple? Or should they try to add more approaches once they master one of them?
If someone is very successful at something AND if he is happy doing that, then there is nothing wrong with continuing it forever. I was a successful eye surgeon but I found it boring. A person needs happiness in addition to success.
A successful trader will continue to learn how to get better throughout his career. He will discover things about himself and the markets that will compel him to change. I think it is unavoidable that a trader will add tools as he learns more.
I’ve been doing this for more than 30 years. I know vastly more now than when I figured out to trade profitably long ago. I see reasonable swing and scalp setups on almost every bar, and most were invisible to me 20 – 25 years ago. I am comfortable swing trading and scalping, and both add to my happiness.
Makes a lot of sense. Thanks!