Emini and Forex Trading Update:
Thursday February 25, 2021
I will update again at the end of the day.
Pre-Open market analysis
The Emini had a 2nd strong bull day yesterday. This increases the chance of a test of the all-time high, and possibly the Emini testing 4000 Big Round Number within the next couple weeks.
The bulls are trying to get February to close near its high tomorrow, and they would like the month to close at a new all-time high. Any close near the high of the month would increase the chance of higher prices in March.
Can today be a 3rd consecutive strong bull trend day on the 5-minute chart? After a buy climax day, there is only a 25% chance of another very strong bull day today. If today is a bull trend day, it will probably be a weaker bull trend, like a trending trading range day, or a broad bull channel.
Since yesterday was a buy climax day on the 5 minute chart, there is a 75% chance of at least a couple hours of sideways to down trading today starting in the 1st couple hours. It is probably too late in the month for the bears to erase the bullishness on the monthly chart this month, with only 2 days remaining.
Overnight Emini Globex trading
The Emini is down 9 points in the Globex session. If it opens here, it will be at the bottom of the 2-hour trading range at the end of yesterday. Remember, the odds favor at least a couple hours of sideways to down trading, to begin by the end of the 2nd hour. It often begins on the open.
The odds are against a strong bull day after 2 strong bull days. Many bulls will take some profits on strong rallies. But the odds are also against a big bear day when the momentum up has been so strong. Today will probably be either a weak bull or bear trend day. Also, it will probably spend a lot of time going sideways. There should be at least one swing up and one swing down.
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. 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
The EURUSD Forex market on the daily chart so far today, has formed a big bull trend bar, with a close far above the top of the month-long trading range. This is a breakout above a head and shoulders bottom bull flag.
The bulls want today to close near its high, which would be far above the January 22 high. Then, they need tomorrow to have at least a small bull body. If they get both, traders will look for the rally to have at least a 2nd leg up, and test the January 6 high. But if today closes in the middle of the day’s range, or if tomorrow has a bear body, traders will expect this breakout to fail.
Overnight EURUSD Forex trading
The EURUSD Forex market on the 5-minute chart rallied strong overnight. Day traders have only been buying, and they bought for a swing trade and for scalps. The EURUSD has been going sideways for a couple hours. However, the range is only 15 pips tall. That is not big enough for day traders to begin to sell. They will only buy until there is at least a 20 pip pullback. Even then, it will still be easier to make money as a bull.
Can today reverse down? Yes, but the bears will usually have to get at least one 20-pip selloff first, and then some kind of a double top. It is more likely that today will be mostly sideways for the remainder of the day.
The fight will be over the close. The more the day closes near the high, the more likely the breakout will succeed. But if the bears can get the day to close in the middle of its range, and around the January 22 high, the bulls will need a strong bull day tomorrow to make traders conclude that the breakout will be successful.
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. 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 sold off in a strong bear trend today. The sell climax reversed up at a cluster of support below yesterday’s low and the January high, and just above the midpoint of February’s range. After the initial bounce, there was a higher low major trend reversal that retraced about half of the day’s range. The Emini then sold off again into the end of the day.
A gap down tomorrow would create a month-long island top with the February 2 gap up. If the gap stays open, it could lead to a measured move down to around 3,600.
A big bear day tomorrow would make tomorrow the 1st time since October when the daily chart had consecutive big bear bodies. That would make a 10% correction likely over the next few weeks. Also, there would be a break below the bull trend line on the weekly chart from the pandemic low in March last year.
Tomorrow is the last trading day of the week and month. If February closes below its midpoint tomorrow, there will be an increased chance of lower prices in March.
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.
Any thoughts on buying above 33?