Emini and Forex Trading Update:
Friday May 29, 2020
I will update again at the end of the day.
Pre-Open market analysis
By the Emini yesterday rallying above 3044.25, it was no longer in correction territory. That is 10% down from the high and a correction is defined as a selloff of 10%. It collapsed back to that price, which was near the open of the day, at the end of the day. Breakouts often fail. Therefore, today and the month might close below that number. It could be a magnet at the end of the day.
It is important to remember that the Emini is in the Sell Zone. The math is good for trades going short. The zone is from the 200 day EMA to the March 3 high. Yesterday is a sell signal day, but it had a prominent tail below. The bears should have their stops above the all-time high because the Emini could easily go a little above the March 3 high before the selloff begins.
Remember, picking the exact top in a bull trend is a low probability bet. Therefore, yesterday is probably not the end of the rally, especially when there is an important magnet above.
But it might be, and the Emini is in a zone where the math is becoming good for the bears. But, it is only worth shorting if a trader can trade a small enough position to rely on a stop above the all-time high.
Last day of the week and month
Today is the last day of the week and month. What happens affects the appearance of the weekly and monthly charts. So far, this week is a big bull bar trading near its high on the monthly chart.
It is a doji candlestick on the weekly chart. But if the week closes near the high of the week, traders will expect higher prices next week.
The most important price is 3125.75. That is the March 3 high and the start of the March crash. If the bulls break strongly above it, they will probably get a new all-time high this summer.
At the moment, it is more likely that the rally will get exhausted around that price. Traders would then look for about a 50% retracement of the rally and a continuation of the 2 1/2 year trading range.
Overnight Emini Globex trading
The Emini is down 10 points in the Globex session. Traders will pay attention to the appearance of the weekly an monthly chart today. After yesterdays’s Big Up, Big Down, there is Big Confusion. That increases the chance of trading range price action today.
The bulls want the day, week, and month to close on their highs. Because all 3 time frames are in bull trends, there is an increased chance of a rally a the end of the day.
The best the bears can probably get today is a close below the open of the week. That is just below yesterday’s low. Consequently, even with yesterday’s strong selling, the Emini will probably not form a big bear trend day 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. 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 consecutive bull bars above the neckline of its head and shoulders bottom. Traders expect at least a small 2nd leg up and possibly a measured move up.
The rally is now at the March 27 high. This is interesting because the bulls who bought that strong close never had a chance to exit without a loss after seeing the bear bar on the next day. Today is their chance to exit without a loss. Will they take it?
If the EURUSD stalls here for 2 – 3 days, it would indicate that a lot of bulls are exiting. That would increase the chance of a pullback, maybe to below the neckline of the head and shoulders bottom.
But if the next 2 – 3 days are also bull days closing near their highs, traders will expect the rally to test the March 9 high within a few weeks.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market rallied overnight to the March 27 high. But it has stalled in a 20 pip range over the past 4 hours. The pullbacks are too small for the bears to short. However, if it continues sideways here, they will become increasingly confident and day traders will start to short.
The stall indicates hesitation on the part of the bulls. They have switched from swing trading to scalping.
Even though the EURUSD has stalled, it is still forming small higher lows and highs. Therefore it is still in a bull channel on the 5 minute chart. Day traders know there is a chance of another leg up from here. Since the day’s range is already big, if there is a breakout above the March 27 high, the rally will probably not go up much higher 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. 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
Early today, I took profits on my shorts from yesterday, but I think it is okay to be short. I expect I will be able to get short again higher, like around 3,100.
The Emini sold off early but reversed up. The reversal up was a bull major surprise. Traders expect some follow-through buying on Monday.
Today closed above 3044.25, which is 10% down from the all-time high. The Emini is therefore no longer in correction territory.
The day closed near the high. It is a High 1 bull flag buy signal bar for Monday. on the daily chart.
Today was the last trading day of the month. May was a strong entry bar for the High 1 bull flag on the monthly chart. But, there will probably be sellers above 3,100.
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.
Hello Al – would it be possible for you to share some thoughts on other indices (QQQ, IWM)?
NQ is approaching its all time high already. Do you think the rally has exhausted?
Is 146 a reasonable target for IWM for shorts?
Thank you
Hi Lea,
Al is already stretched too thin and really cannot do any more. He in fact should be doing less, much less!
I appreciate your interest, but I am always encouraging Al to not push so hard. Therefore, he cannot add analysis of other markets. Trust you can understand.