Emini and Forex Trading Update:
Tuesday August 13, 2019
I will update again at the end of the day.
Pre-Open market analysis
Yesterday traded below Friday’s low and therefore triggered a sell signal on the daily chart. The bears saw last week as a 4 day bear flag.
Since Friday was a bear doji, it was a weak sell signal bar. Also, after 2 big bull bars, the context is bad as well for the bears. There will likely be more buyers than sellers below Friday’s low either today or tomorrow.
The 2 week selloff in early August was surprisingly big. That makes at least a couple more weeks of sideways to down trading likely. The Emini is deciding whether last week ended the 2 week selloff. It might take several more days until that is clear.
Confusion usually results in a trading range. The Emini will probably be mostly sideways for a couple weeks. This is true even it it tests above last week’s high or below last week’s low and 2800.
Overnight Emini Globex trading
The Emini is down 8 points in the Globex session. There might be a small gap down opening. But small gaps typically close in the 1st hour. Also, even though the Emini has sold off for 2 days and yesterday was a bear Surprise Day on the daily chart, the odds are that there will be a test back up starting at some point this week.
Because the daily chart is probably forming a trading range, day traders will look for reversals every few days. Furthermore, day traders know that a trading range on the daily chart increases the amount of trading range price action on the 5 minute chart. As a result, traders will expect at least one reversal every day.
While yesterday reversed up in the final hour, the rally followed a 6 hour tight bear channel. It was therefore likely to be minor. But it was strong enough so that a reversal up this morning would have a 40% chance of being major.
A major reversal in a bear trend means a conversion into a bull trend. Consequently, day traders will look for a reversal up from around yesterday’s low.
But is important to understand that 60% of major trend reversal setups lead to small profits or losses and not bull trends. Therefore, the odds still favor trading range price action again 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. 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 broke below the 4 day bull flag yesterday, but reversed up. Today so far is an inside day after yesterday being an outside up day. An ioi pattern is a Breakout Mode pattern, but it changes nothing since the chart is already in Breakout Mode.
The bulls want a bull breakout and a test of the July 11/July 19 double top. The bears want the 2 week rally to be a bear rally in the yearlong bear channel.
Since the reversal up in early August was strong, the odds favor at least a small 2nd leg up to the July double top. However, a tight trading range can last a long time. Traders will continue to sell near the top and buy near the bottom of the now 6 day range until there is a clear breakout.
It is important to note that the daily chart has been in a trading range for 5 months. Consequently, the breakout of the 6 day tight trading range will probably not get far before reversing.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart reversed up overnight from above yesterday’s low and the bottom of the 6 day tight trading range. It is now stalling just below yesterday’s high and the top of the range.
Because the 6 day range followed a rally, it is slightly more likely to be a bull flag than a top. But until there is a breakout, there is no breakout. Day traders will continue to buy low, sell high, and scalp until there is a clear breakout. Six days in a tight range is extreme. Day traders expect a breakout up or down this week.
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 had an unusually strong rally on the open. When one is that extreme, the day usually then enters a trading range, which happened today. That early rally was a Bull Major Surprise and it may give the chart a bullish bias for several days. But the bulls might be exhausted from such extreme buying. If so, the Emini might go sideways to down for a couple days before trying for a 2nd leg up.
Today also triggered the weekly buy signal by going above last week’s high. However, it pulled back and went sideways. The Emini will probably test last week’s high again tomorrow or Thursday.
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
Thank you for adding the blue beginner swing boxes to the Daily Setups, they are a very valuable addition
You marked b5 and b9 as beginner swing buys, but also noted that the big bars mean wide stops, and on your other website that b9 needs WSS
Should the beginner swing trader use the immediate SB as their stop in these examples?
Thank you
In general, a beginner should use a tight stop. Below the bottom of the signal bar is often good. But if the signal bar is in a tight trading range, then below the tight trading range.