Emini and Forex Trading Update:
Wednesday September 9, 2020
I will update again at the end of the day.
Pre-Open market analysis
The Emini yesterday traded below last week’s low, which triggered a minor weekly sell signal. It is oversold on the daily and 60 minute charts and probably will bounce today or tomorrow. However, traders expect a 2nd leg down to around the bottom of the 9 consecutive bull bars, which is around 3200. The selloff might reach 3000.
It is important to note that the 5 month reversal up from the March sell climax was strong. Traders will even buy a 10 – 20% selloff. Therefore, the current reversal down will probably be minor on the daily and weekly charts.
Traders do not expect the selloff to go straight down and back up. More likely, the Emini will be sideways to down for several weeks before the bulls will buy. It could remain in a trading range up to the election.
Overnight Emini Globex trading
The Emini has rallied overnight and it is up 30 points in the Globex session. It will therefore probably open near yesterday’s high.
Even though yesterday sold off late, it was still mostly a trading range day. That means that the bears lost some momentum. This is coming at the support of the February high. Also, the bears have big profits. Many will begin to buy back some of the shorts. Additionally, bull traders are looking to buy for a 1 – 3 day bounce. These factors increase the chance of a rally for at least a day or two. and it will probably begin today or tomorrow.
Can the Emini continue straight down to below the August low, close the gap on the monthly chart, and test the 50 day MA? Yes, but because it is oversold and stalling at support, day traders will expect a rally to begin this week.
Since yesterday was a trading range day, there is an increased chance of more trading range price action. However, there is also an increased chance of a short-covering rally in an oversold market at support.
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. I do not want the lines to be distracting. If they are longer, I make them dotted. But, they have to be visible, so I make the shorter ones solid. 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 (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 6 weeks. For the bears, it is turning down from a wedge top. Since there is a bigger wedge top on the weekly chart and it is at the resistance of the September 2018 lower high, traders should expect lower prices. A reasonable target is the June 10 high, which is the breakout point of the July rally.
However, a trading range is a Breakout Mode pattern. The EURUSD cannot go sideways unless it is balanced. Therefore, the odds are only slightly better for the bears.
1st new low in 2 months
It is important to note that the EURUSD’s overnight low was 3 pips below the August 21 low. This is the 1st minor lower low since June, and it therefore is a sign that the bulls are not as strong as they have been. But until there is a breakout, there is no breakout, and the odds are only slightly better for the bears.
The overnight breakout below the August 21 low has only been 3 pips. That is not convincing. Also, there are now 2 small legs down from the September 1 high. That is the minimum goal for the bears and some will take profits. If the bears do not break further below that low today, traders will expect a bounce to the top of the 3 day selloff, which was the start of the 2nd leg down.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market has been in a 35 pip tall trading range overnight. It barely broke below the August 21 low and its bounce up has been small. There is no energy. Day traders have been scalping reversals up and down for 10 pips.
The bears want today to close far below that low. That would increase the chance of a break below the 6 week trading range this week.
The bulls hope that today is the start of a reversal up from a double bottom with that low.
While it is possible that today could have a surprisingly strong move up or down, it is unlikely. At a minimum, the bulls want today to close above the open. Today would then be a stronger buy signal bar for tomorrow. This would increase the chance of a bounce for a few days.
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. I do not want the lines to be distracting. If they are longer, I make them dotted. But, they have to be visible, so I make the shorter ones solid. 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 (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 rallied in a Small Pullback Bull Trend today. There was a late profit-taking selloff, but the odds favor a 2nd leg up tomorrow or Friday.
However, traders still expect a 2nd leg down to 3000 – 3200 before there is a new high. They will look to sell a 2nd leg up to around 3450 – 3500.
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 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.
Emini: Isn’t the bear bar closing at it’s low at ~7:20 a H2 / DT with today’s high sell setup?
Yes, but after consecutive big bull bars closing near their highs, the bulls were likely to get at least one more small leg up.