Emini and Forex Trading Update:
Friday August 9, 2019
I will update again at the end of the day.
Pre-Open market analysis
Yesterday was an exceptionally strong Small Pullback Bull Trend day. It reversed up from a one bar selloff on the open that tested Wednesday’s high. The bears could not close the gap above Wednesday’s high. The rally continued up to above last week’s low, closing the gap on the weekly chart.
I said over the past few days that the week might close around the open. After yesterday’s strong rally to far above the open, that is now unlikely. The bulls want the week to close near its high so that this week will be a stronger buy signal bar on the weekly chart. At a minimum, they want the week to close above last week’s 2913.50 low. That will therefore be a magnet in the final hour.
Because yesterday was extremely strong on the 5 minute chart, the rally is unsustainable. It is therefore a buy climax. Day traders expect at least a couple hours of sideways to down trading to begin by the end of the 2nd hour. There is only a 25% chance of another relentless bull trend today.
Will the bull trend on the daily chart resume from Wednesday’s micro double bottom? The selloff was strong enough to probably lead to a trading range 1st for a couple weeks. The daily chart over the next 2 weeks will more likely resemble early and late 2018 than early 2019.
Overnight Emini Globex trading
The Emini is down 15 points in the Globex session. After 2 huge days of trending up, the bulls are exhausted. Today therefore will probably not be another big bull trend day. More likely it will have mostly trading range price action.
Today is Friday so weekly support and resistance can be important. This is especially true in the final hour. The bulls want the week to close on its high. Also, they would like it to close above last week’s low of 2913.50. At a minimum, they want it to close above the 2885.50 open of the week. That is below yesterday’s low and an unlikely target.
The goal for the bears is to have the week be a less strong buy signal bar for next week. They want to put as big a tail on the top of this week’s candlestick as they possibly can.
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.
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.
EURUSD Forex market trading strategies
The EURUSD daily Forex chart has been sideways for 4 days and the daily range is shrinking. This is a triangle and it is therefore a Breakout Mode pattern.
The bears want the 2 week rally to be a lower high in a yearlong bear channel. But the rally was strong enough to make a 2nd leg up likely. What traders do not yet know is whether the 2nd leg up will be from this triangle or from a break below that reverses up.
When there is a Breakout Mode pattern, traders know that the 1st breakout up or down will fail 50% of the time. Furthermore, they know that it is equally likely that the eventual successful breakout will be up or down.
Downside support is at the August 1 buy signal bar high and the May low. Resistance is at the July 11/July 19 double top and then the June high.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart so far has a small range today. Its low is above yesterday’s low and its high is below yesterday’s high.
Today is currently another inside day. Day traders are continuing to scalp as they wait for a breakout above or below the 4 day range. If a breakout is strong and has follow-through, they will swing trade in the direction of the breakout. If it is brief and reverses, they will swing trade in the opposite direction, betting that the breakout will fail.
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.
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.
End of day summary
The Emini sold off on the open to just above the open of the week. It dipped below the 60 minute EMA and the 2900 Big Round Number and reversed up. This week is now a buy signal bar on the weekly chart.
However, it is a doji bar on the daily chart, which is neutral. Also, after Big Up in July, and now Big Down and Up in August, there is confusion. That will probably result is a few sideways days next week, despite the good buy signal bar on the weekly chart.
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 Intraday Market Update page.
Hi Al,
What would you recommend to a trader given these large bars for taking profit. I bought above bar 1 for a swing but got out below 3. It’s just frustrating to have a few points profit which turns into a losing position. Would you ever recommend moving to break even.
Thanks
Big bars usually come with big reversals and trading range trading. It is impossible to know in advance how big the legs up and down will be. But it is better to take quick profits and assume that there will soon be a reversal.
When the bars are big, a quick profit has to be big. I would not let a quick, big profit evaporate. I would rather take it and miss an even bigger move than hold on and watch it disappear.
When there is trading range price action, nothing is clear. Traders have to do what appears reasonable, even if it looks stupid in hindsight.