Emini at top of parabolic wedge and bull channel

Trading Update: Monday November 8, 2021

Emini pre-open market analysis

Emini daily chart

• Parabolic wedge and bull channel rally (October 7, October 26, November 5) at top of bull channel (May 7, September 2, November 5). Probably 1 to 3 days of profit taking this week, possibly started on Friday.
• Friday was a bear bar at the resistance of the top of the 2 bull channels and the 4700 Big Round Number and in an extreme buy climax.
• It is a sell signal bar for today in a very overbought market so the profit taking could be extreme in terms of points.
• Friday had a prominent tail below so it is a weak sell signal bar.
• Bulls will buy the 1^st 1- to 3-day selloff, even if it is strong.
• Bears typically will need at least a micro double top before getting more than a 3-day pullback.

Emini 5-minute chart and what to expect today

• Emini is up 10+ points in the overnight Globex session.
• Everyone sees the buy climax and the top of the channel on the daily chart, and Friday’s bear body.
• However, the bulls have been extremely strong. They will try to overpower the bears again today and create another new high. So far, there has been a new high every day in November, and the bulls want the streak to continue.
• However, the bear bar and the buy climax at resistance should attract some profit taking early this week. That reduces the chance of a big bull day today.
• Furthermore, it increases the chance of sideways to down trading early this week.
• Because the Emini is so overbought, the profit taking could be big and fast. That increases the chance of a strong bear day this week.
• If there are early consecutive big bear bars closing near their lows, that would increase the chance of a bear trend day.
• What about a strong bull trend day? That is less likely, given that Friday stopped at the resistance of both channels on the daily chart.
• The gap on Friday was huge, and the selloff was strong. Big Up, Big Down creates Big Confusion. That increases the chance of trading range trading for a day or two.

Friday’s Emini 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. 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. These therefore are swing entries.

It is important to understand that most swing setups do not lead to swing trades. As soon as traders are disappointed, many exit. Those who exit prefer to get out with a small profit (scalp), but often have to exit with a small loss.

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

EURUSD Forex daily chart

• Failed break below month-long trading range.
• Lower low double bottom with October 12 low.
• High 2 buy signal with October 29.
• Small bull body so buy signal bar could be stronger.
• If bulls fail to get strong reversal up in next few days, selloff should resume down to below March 9, 2020 high. That was the breakout point of last year’s rally.
• Should rally for a month or two soon since at bottom of 15-month trading range and in middle of 7 year trading range.
• Still more likely will dip down to 1.15 or 1.14 before turning up, but a couple big bull bars this week would make traders conclude that the reversal has begun.

Summary of today’s S&P Emini futures price action and what to expect tomorrow

End of day summary

• Daily chart has parabolic wedge and a double top. Friday was a bear bar, but it had a prominent tail below. That made it a weak sell signal bar.
• Today was an inside day and another bear bar. It closed near its low and it is a better sell signal bar for tomorrow
• There is now a micro double top. Also, there is a 9-bar bull micro channel, which is an extreme streak and therefore a buy climax. These factors increase the chance of a 1- to 3-day pullback this week.
• However, any reversal down will probably be minor since the bull trend is so strong.
• Since today’s high was below Friday’s high, it is a High 1 buy signal bar. But consecutive bear bars in a buy climax is a low probability buy setup. There will probably be more sellers than buyers above today’s high.
• On the 5-minute chart, today was Bear Trend From The Open, but quickly converted into trading range.
• While trading range for 1^st 2 hours, there were also lower highs. Therefore, there was also a bear channel.
• There was a midday reversal up, but it formed a lower high.
• Today remained a trading range day.

See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.

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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.

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Charts use Pacific Time

When I mention time, it is USA Pacific Time. The Emini day session charts begin at 6:30 am PT and end at 1:15 pm PT which is 15 minutes after the NYSE closes. You can read background information on the market reports on the Market Update page.

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