Emini and Forex Trading Update:
Thursday April 2, 2020
I will update again at the end of the day.
Pre-Open market analysis
Yesterday triggered a sell signal on the daily chart after the 1st pullback to the EMA in a bear trend. However, following a 7 day bull micro channel, the bears will probably need at least a micro double top before they get a test of the low.
There was a late reversal up yesterday on the 5 minute chart from a big wedge bottom. That makes at least a small 2nd leg up likely today.
In addition, last week is a buy signal bar on the weekly chart. The buy was triggered this week when this week broke above last week’s high. The bulls see yesterday as a pullback from the break above last week’s high.
When there are conflicting signals, there is confusion. That usually results in a trading range.
Finally, there is uncertainty about tomorrow’s unemployment report. Everyone knows it will be bad. No one knows how the market will react. It is still more likely that the bulls will get a 2nd leg sideways to up before there is a new low.
Overnight Emini Globex trading
The Emini is up 25 points in the Globex session. There will probably be a 2nd leg sideways to up after yesterday’s late rally from a big wedge bottom on the 5 minute chart.
A wedge with big swings up and down like that typically evolves into a trading range. With tomorrow’s unemployment report being unusually important, that increases the chance of a mostly sideways day today. The confusion over the buy signal on the weekly chart and the sell signal on the daily chart further increases the chance of sideways trading.
Day traders should expect at least one swing up and one swing down today. Any day can be a big trend day. However, the odds favor trading range trading today.
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 (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 daily chart of the EURUSD Forex market is in the middle of a 6 month expanding triangle. There have been several recent abrupt reversals up and down. The bears hope that this rally is simply a pullback from the March breakout to a new low.
But last week’s rally was so strong, many bulls will buy this week’s selloff. It is more likely that the selloff will form a higher low within the next few days and then test the March 16 high again.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market has traded down in a Spike and Channel Bear Trend overnight. That pattern usually has a bull break above the bear channel and then a rally up to the start of the channel. That target is the lower high at 1.0940. Then, the chart typically evolves into a trading range.
Consequently, even though the bulls have not been buying, they are looking to buy. Day traders will continue to sell rallies, but they will soon only scalp. Since the target for the bulls is only about 40 pips above the current price, when they buy, they, too, will be scalping. Unless the bars become much bigger, day traders will look for quick profits up and down today.
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 (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 strongly up to yesterday’s high and the 60 minute EMA and then stalled. This was also at the 2500 Big Round Number.
Although it was mostly a trading range day, the early bull trend resumed and the Emini closed near the high. If it gaps up tomorrow, there will be a 2 day island bottom. Remember, after a 7 day micro channel on the daily chart, this pullback was likely to last only 2 – 3 days.
Traders are waiting for tomorrow’s unemployment report. Everyone knows it will be bad. No one knows if that is already fully priced into the market. Because of the report before the open tomorrow, there is an increased chance of a trend day up or down.
Tomorrow is Friday. This week triggered a weekly buy signal. The bulls therefore would like this week to close above last week’s high. That would increase the chance of higher prices next 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 Market Update page.
