Emini and Forex Trading Update:
Friday May 7, 2021
Pre-Open market analysis of daily chart
- Streak of 8 consecutive bear bars ended yesterday. Emini may see bulls rally resuming.
- There was another streak of 8 bear bars in 2005, and a streak of 10 bear bars in 2017. Therefore, this streak is extreme.
- Still in tight trading range, so Breakout Mode.
- Yesterday was a big bull outside up day at the 20-day EMA in a bull trend. That increases the chance of a breakout above the 4-week tight trading range.
- Yesterday had a Major Bull Surprise reversal up. That increases the chance of higher prices today.
- If today is a big bull day, it would confirm yesterday’s rally, and increase the chance of higher prices over the next couple weeks.
- If today is a bear day, then the trading range is still intact.
- Today is Friday, so weekly support and resistance can be important.
- Bulls want week to close above open of week, so week would have bull body.
- Bulls want week to close above last week’s high, which was the all-time high.
- Bears want week to close below last week’s low, since last week was sell signal bar.
Overnight Emini Globex trading on 5-minute chart
- Up 12 points in the Globex session, so today might gap above yesterday’s high.
- Today is important. There is an increased chance of a bull trend day after yesterday’s strong rally.
- If there is a series of strong bull bars in the 1st hour, day traders will look to buy all day.
- The Emini has been in a trading range for 4 weeks, and the bulls are hoping that today will break far above the range.
- They hope yesterday was the start of a leg up on the daily chart, and they want it to last at least a couple weeks.
- If today breaks above last week’s high, this week will be an outside up week. If it closes near the high of the week, whether or not it is outside up, traders will expect higher prices next week.
- The bears want the rally that began yesterday to reverse down from the top of the range. They want the trading range to continue, and therefore need the Emini to reverse down over the next few days from around the top of the range.
- If there is a series of strong bear bars in the 1st hour, today could be a bear trend day.
- Because yesterday’s rally was unusually strong, if today is going to be a trend day, up is more likely.
- Most days over the past month have had at least one swing up and one swing down. While yesterday was strongly bullish and today might gap up, day traders know that the odds always favor a lot of sideways trading. They therefore will expect to trade in both directions unless there is a clear trend.
Yesterday’s Emini setups
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- 2-day rally stalling at May 3 high, which was likely. Bears want double top bear flag and 2nd leg down from consecutive micro wedges in April.
- Bulls want breakout above April 29 high. That is less likely, but even if they get it, the breakout will probably reverse down from a wedge, where the 1st 2 legs up were March 18 and April 29.
- Today is the last day of the week. The bulls want the week to close on its high. This week would then be a High 1 buy signal bar on the weekly chart.
- However, last week was a big bear bar closing on its low, and the rally will probably form a lower high and lead to a 2nd leg down from the January 6 yearlong wedge top.
- That means this week will be a weak buy signal bar, which would probably have sellers not far above.
- Sideways for 3 weeks, and unlikely to go much higher.
- Odds favor a 50% pullback to around 1.19 in May.
- 9-month trading range should continue for at least a couple more months.
Overnight EURUSD Forex trading on 5-minute chart
- Strong rally on the US jobs report, but so far, the rally is pausing just below last week’s high.
- This week might go above last week’s high, after reversing up from below last week’s low.
- If so, this would be an outside up week.
- If this week closes near its high, and especially above last week’s high, traders will expect higher prices next week.
- The bears want the rally over the past few minutes to be a bull trap. They want the EURUSD to reverse down from below last week’s high.
- They want today to close below the open, so that it would be a sell signal bar for Monday.
- At the moment, they have a 40% chance that today will reverse down at some point.
- There is a 50% chance that today will continue up to above last week’s high.
- The EURUSD was in a small range ahead of the jobs report. Day traders bought on the report.
- If there is follow-through buying over the next few bars, today will probably be a bull trend day.
- If it is, it could trend up all day.
- Or, it could be a weak bull trend day that enters a trading range but closes near its high.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
- Bull Trend From The Open.
- Minor reversal down from parabolic wedge top.
- Bull trend resumption, but wedge rally to higher high major trend reversal led to swing down.
- Reversed up after a failed breakout below a wedge bull flag, and closed near the high of the day.
- Today was breakout above 4-week tight trading range. Monday is the follow-through day. If it is a bull bar, it will confirm the breakout and increase the chance of a 100-point measured move up above the 4-week trading range.
- This week closed near the high so increased chance of gap up on weekly chart on Monday.
- Since breakout above tight trading range, increased chance of disappointing follow-through on Monday.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
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 Time
When I mention time, it is USA Pacific Time (the Emini day session opens at 6:30 am PT, and closes at 1:15 pm PT). You can read background information on the intraday market reports on the Market Update page.
What are the odds the TTR is a final flag?
I wrote about this in tomorrow’s weekend report. The odds are that it will be, but the market could rally for a couple weeks before there is a reversal.