Emini and Forex Trading Update:
Wednesday September 11, 2019
I will update again at the end of the day.
Pre-Open market analysis
Yesterday pulled back but closed on its high in a bull trend on the daily chart. It is therefore a High 1 bull flag buy signal bar for today.
But, yesterday was the 4th sideways day after last week’s gap up. Also, the ledge top on the daily and weekly charts is a magnet below. Any gap down this week will create an island top on the daily chart. What is not clear is whether the Emini will test down to below the top of the ledge or go directly up to a new all-time high. The probability for each outcome is 50%.
Overnight Emini Globex trading
The Emini is up 3 points in the Globex session. Traders are still deciding if last week’s breakout will succeed or fail. Yesterday’s late reversal up helps the bulls, but they need more.
The past 4 days have been trading range days. Traders will expect the trading range price action to continue again today.
However, since the daily chart is in Breakout Mode, day traders are ready to swing trade up or down. They know that the odds of a big trend day up or down are increasing.
It will probably begin early in the day. Day traders will therefore look for a strong buy or sell signal and a strong early breakout up or down. If they see that, they will swing trade, betting on a strong trend day.
But if the open is unclear for an hour or more, as has been the case for 4 days, they will expect another trading range day.
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 formed a micro double top at the EMA after a brief reversal up from the bottom of its bear channel. I said that it was likely to test back down to retrace at least half of the rally. The overnight selloff has accomplished this minimum objective.
Traders are still not sure if the rally was a bear flag or the 1st leg up in a 2 legged reversal. They will get information over the next few days that will help them decide. If today’s selloff continues for 2 – 3 days, the odds will favor a new low. But if tomorrow forms a reversal day, traders will expect a 2nd leg up to the August 26 lower high.
Every bottom attempt for the past year failed. As a result, traders expect every 2 – 3 week rally to form a lower high and then lead to another new low.
Overnight EURUSD Forex trading
I said yesterday that the bears had a micro double top at the EMA on the daily chart and that there would probably be a test of the September 3 buy signal bar high. The 5 minute chart has been selling off in a tight bear channel overnight and it is near that target.
When a selloff is in a tight bear channel, day traders will only sell. They sell for scalps or swings. Since the selloff is near the support of the September 3 buy signal bar high, there is probably not much left to the bear trend today. Consequently, the bears will begin to take some profits. In addition, they will switch from selling at the market to selling 20 – 30 pip bounces. This should convert the tight bear channel into a trading range.
Once the bulls believe the chart is beginning to enter a trading range, they will look to buy reversals up for 10 pip scalps.
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 rallied in a Small Pullback Bull Trend today. After a 2 hour pullback, the bulls got trend resumption up and a new high. The Emini closed above the 3000 Big Round Number, which increases the chance of a new all-time high in the next couple weeks.
If tomorrow is a strong bull day, there will probably be a new high within days. But since today was a buy climax, there is only a 25% chance of a big bull day tomorrow. Furthermore, there is a 75% chance of at least a couple hours of sideways to down trading that begins by the end of the 2nd hour.
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.
Just wondering if you have any thoughts on the EUR/USD going forward?
Hi Geoffrey,
You can review Al’s weekly reports for Al’s longer term thoughts. Al needs to focus on the current day’s situation for these daily reports but he does say ‘…more sideways until clear’.