Brooks Trading Course

Learn to Trade Price Action Consistently

 

More results...

Emini streak ended but buy climax continues

By

Emini and Forex Trading Update:
Friday April 16, 2021

Pre-Open market analysis of daily chart

  • Emini streak ended Wednesday, a bear day, ending streak of 13 consecutive bull days.
  • Longest streak in 10 years, so unsustainable and an extreme buy climax.
  • Climaxes can continue much longer than what might seem reasonable. No top yet.
  • Since buy climax is most extreme in 10 years, profit taking likely to begin soon. Once there is profit taking after an extreme buy climax, it often lasts much longer than a typical pullback. Emini could enter trading range for many months.
  • Wednesday was 1st pullback in 13-day bull micro channel. Bulls eagerly bought 1st pullback in 13 days.
  • Entering a zone around 4,200 of several measured move targets, which often leads to profit taking.
  • As long as traders are buying every intraday selloff, bull trend on daily chart will continue.
  • Extreme buy climax Increases risk of big bear day at any time.
  • If series of strong trend bars up or down in 1st hour, increased chance of trend day.
  • Even though most days have had a least one swing up and one swing down, on most days, traders bought selloffs in 2nd half of day, and day rallied into the close.
  • Today is Friday and therefore weekly support and resistance can be important, especially in the final hour.
  • The bulls want the week to close near its high, which would increase chance of higher prices next week.
  • Bears want week to close below open. That is unlikely because the week’s open is far below today’s likely close.
  • Alternatively, they want to week to close below the midpoint. That would increase the chance that next week would be sideways instead of up.

Overnight Emini Globex trading on 5-minute chart

  • Up 9 points in the Globex session, so might get gap up to new all-time high.
  • Small gaps usually close before end of day, and usually in 1st hour.
  • For 4 weeks, bulls have bought every intraday selloff, expecting new high.
  • Most days had rally at end of day, which is common in bull trends.
  • Despite strong bull trend on daily chart, most days have also had a bear swing trade.
  • Very tight bull channel on 60-minute chart, and it has lasted more than 50 bars. This increases the chance of a reversal down at any time, and of an acceleration up to a possible blow-off top.
  • Day traders expect a lot of trading range trading, like over past 4 weeks.
  • If series of strong trend bars up or down, then increased chance of trend day.
  • Today is Friday, so increased chance of trend up or down in final hour.

Yesterday’s Emini setups

Emini bull trend from the open then trading range. Emini streak ended Wednesday.

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. 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.

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

EURUSD Forex double top or wedge bottom
  • Small breakout above March 18 high. Bulls need consecutive closes above that high, for traders to look for rally to continue up to next resistance at February 25 lower high.
  • More likely will soon begin a pullback for a week or two.
  • Rally from March low has been in a tight bull channel, and it has had 3 legs up. That is a parabolic wedge buy climax, which typically attracts profit takers.
  • Parabolic wedge rally to a double top (with March 18 high), so increased chance of a pullback to the bottom of the ii (consecutive inside bars) of Friday/Monday. An ii is often a final bull flag, which makes it a magnet.
  • Bears want resumption of 4-month bear trend from double top with March 18 high, but any selloff will more likely form higher low.
  • 3-week rally has been strong enough, so that bulls will buy a pullback that retraces about half of the rally, and tests the March 9 low.
  • Whether or not bulls get successful breakout, EURUSD has been in a trading range since August. It should continue for at least a month, and probably several months.

Overnight EURUSD Forex trading on 5-minute chart

  • Early selloff to below yesterday’s low, and then 9-hour rally to above yesterday’s high. Today is therefore an outside up day.
  • Today’s range has been small, like yesterday’s.
  • Breakout above yesterday’s high was so far only by 1 pip above yesterday’s high. Also, only 5-pip breakout above March 18 high.
  • Range has been small, but trending up since reversal up from below yesterday’s low.
  • Day traders have been mostly buying, but taking quick profits (scalps).
  • Trading range for 5 hours, and day traders have been selling. However, biggest pullback has been only 20 pips. The bears are not yet making money on their shorts. Better to focus on buying until bears begin to make money.
  • Despite 9-hour rally, today’s range is small, and EURUSD in 25-pip range for 5 hours. Day traders have been scalping.
  • They will continue to scalp unless there is a series of strong bull bars breaking above the March 18 high. That is unlikely.
  • They will swing trade shorts if there is a series of big bear bars, which is also unlikely.

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

Emini parabolic wedge then triangle and trading range day.png

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. 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.

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 gapped up to a new all-time high on the open.
  • It sold off and closed the gap, but then entered a trading range, which was a triangle.
  • After a brief break below the triangle, the bulls got a big outside up bar.
  • There was a spike in a Spike and Channel bull trend, but it started too early in trading range day to last to the end of the day.
  • The day closed in the middle, and it was a 2nd bear day after the 13-day streak of bull days.
  • As overbought as the daily and weekly charts are, traders continue to buy, betting that it will go higher.
  • Because the streak of 13 consecutive bull bars is a once in a decade buy climax, the odds favor a 5 to 10% pullback at some point in the next month.

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.

>