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Emini at top of trading range and all-time high ahead of FOMC announcement

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Emini and Forex Trading Update:
Wednesday April 28, 2021

Pre-Open market analysis of daily chart

  • Emini at top of trading range and double top with April 16 high, and yesterday is the sell signal bar.
  • Yesterday had a big tail below and the bull trend is strong, so this is a low probability sell signal.
  • Consecutive doji bars just below the all-time high, and within 2-week trading range means the rally is stalling.
  • Strong bull trend so traders will continue to buy 1- to 3-day pullbacks. But one of those pullbacks will be the start of a 10% correction down.
  • By the time it is clear that a correction in underway, it will be half over.
  • There is no top yet. The next resistance is the 4,200 Big Round Number. After that, there is a measured move target at 4,244 based on the pandemic low and the June 5, 2020 high.
  • A correction should begin before the Emini goes much above that target.
  • The streak of 13 consecutive bull bars that ended on April 14, is the most important chart feature. It will probably be the start of an exhaustive end of the yearlong rally, and lead to a 10% correction this summer. This is true even if the Emini has a couple more brief new highs in May.
  • Because the buy climax is so extreme, the correction could last a couple months.
  • There is a 40% chance it will be 20%.
  • Buy climax on weekly chart is now more than 50 bars. Once a Small Pullback Bull Trend reaches 50 bars, the odds favoring a correction go up significantly.
  • FOMC announcement at 11 am PT today. Even though the Fed has said it will not raise rates for at least a couple years, the report can still lead to a big move up or down.

Overnight Emini Globex trading on 5-minute chart

  • The past 2 days were trading range days. That, and today’s FOMC announcement, increase the chance of trading range trading ahead of the 11 am announcement.
  • If there is a series of strong trend bars in the 1st hour, there will be an increased chance of a trend this morning.
  • Day traders should exit their positions ahead of the FOMC report. This is because there are usually strong moves up and down in the 1st 10 minutes. Day traders should wait at least 10 minutes before resuming trading.
  • They should be open to anything after the report. The Emini can trend up or down, reverse, or stay mostly sideways. If the bars are big, trade a small size.

Yesterday’s Emini setups

Emini expanding triangle opening reversal and then broad bull channel. Emini at top of trading range.

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

EURUSD Forex daily chart

EURUSD Forex bull leg in trading range ahead of FOMC
  • The EURUSD has rallied for 4 weeks, but 5 of the past 6 days were doji bars.
  • This is hesitation, and it is coming at the resistance of the December/February trading range bottom.
  • Traders are deciding if the rally will continue up to the January high, or reverse down to the November 4 low.
  • Since the EURUSD has been sideways for 9 months, it will most likely continue sideways for at least a couple more months.
  • This 4-week rally is more likely a bull leg in the 9-month trading range, than a resumption of the 2020 bull trend.
  • Traders should expect a 1- to 2-week pullback to begin within the next couple weeks.
  • Rally is a Small Pullback Bull Trend, which is strong. It therefore could continue up for another week or so, before the leg down begins.

Overnight EURUSD Forex trading on 5-minute chart

  • FOMC announcement at 11 am PT today. There are often sharp moves up and down on the report.
  • Day traders should exit positions ahead of the report, and wait at least 10 minutes afterwards before resuming trading.
  • Sold off overnight to yesterday’s low, but then reversed up.
  • Sideways for several hours within 4-day trading range.
  • With sharp reversal up from above yesterday’s low, probably will not get much below yesterday’s low ahead of FOMC.
  • Reversal up entered trading range once it reached middle of day. After only selling for the first several hours, day traders are now also buying.
  • Day traders will continue to scalp unless there is a series of strong trend bars.
  • That is unlikely ahead of the FOMC announcement.

Summary of today’s S&P Emini futures price action and what to expect tomorrow

FOMC Trading range day

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

  • Trading range day.
  • Bull Trend From The Open, but reversed down from above yesterday’s high and the all-time high from a Low 2 top.
  • Reversed up from a sell vacuum test of the 60-minute EMA.
  • Entered a tight trading range ahead of the FOMC announcement.
  • Huge outside bar just after 11 am PT FOMC announcement, wedge bottom, but big tails so trading range bar.
  • Resumed up to another new all-time high, but then reversed down from a 2nd Leg Bull Trap.
  • Today closed near the open, like the past 2 days.
  • 3-day tight trading range so still Breakout Mode on daily chart.
  • Low 2 top on daily chart but 3 dojis so low probability sell signal.
  • Daily chart still in 3-day tight trading range at top of 3-week trading range.
  • Friday is final day of month and monthly chart has big bull bar so far in April. But a bar often changes just before it closes so increased chance of pullback before Friday’s close. That would put a tail on top of the monthly bar, making it less bullish.
  • Overbought daily and weekly charts, but strong bull trend so higher prices are always more likely than a successful reversal.
  • Since extreme buy climax, odds favor a 10% pullback some time this summer, but picking the exact top is a low probability bet.

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 Time

When I mention time, it is USA Pacific Time (the Emini day session opens at 6:30 am PT, and closes at 1:15 pm PT). You can read background information on the intraday market reports on the Market Update page.

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