Emini and Forex Trading Update:
Friday October 9, 2020
I will update again at the end of the day.
Pre-Open market analysis
The Emini broke above the September 16 top of the wedge bear channel yesterday. It also closed above that high. If the bulls can get a 2nd consecutive bull bar today, there will be a higher chance of the rally continuing to around the top of the 3400 – 3500 sell zone.
When the Emini breaks above an important price, it often does sideways for a few days. Yesterday might be the start. Then, after 2 – 3 days, traders decide if the rally will continue or if the breakout will fail. Therefore, there is an increased chance of today being another sideways day.
Today is Friday so weekly support and resistance can be important. This is particularly true in the final hour. So far, this week is a bull bar closing near its high.
If today closes near its high, this week will close near the high of the week. Also, it would close above last week’s high and above the top of the September trading range. That would increase the chances of at least slightly higher prices next week.
Overnight Emini Globex trading
The Emini is up 16 points in the Globex session. It will therefore probably gap above yesterday’s high. Because there is an increased chance that yesterday’s break above the month-long trading range will lead to a couple sideways days, there is also an increased chance that the Emini will form a trading range day today. If there is an early selloff that closes the gap up, that could be a sign of a sideways to down day.
The Emini yesterday broke above an important price. The next significant resistance is 3480 – 3500. Therefore, the Emini might trend up today. Bull trend days usually form an early low of the day. If there is a reversal up from a failed selloff, or if there are several consecutive bull bars on the open, traders will look for a bull trend 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 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 has been rallying in a Small Pullback Bull Trend for 2 weeks after reversing up from below a trading range. The bulls want this to be a resumption of the 4-month bull trend. They need a breakout above the September 10 lower high to end the 2-month bear trend. The chart would then be back in trading range mode or in a bull trend.
The bears always want the opposite. They know that a reversal up from a sell climax usually tests the start of the sell climax. They therefore expect the rally to reach at least the September 21 high. However, they will try to get a reversal down from there, or from a double top with the September 10 or September 1 highs.
Right now, the bulls and the bears have about the same probability. A reversal down from a double top will return the chart to a bear trend. The bulls need a couple closes above the September 1 high to convince traders that the rally will continue up to 1.25 at the February 2018 high.
Today is Friday so it affects the appearance of the weekly chart. If the EURUSD closes the week right here, there would be a bull bar closing on its high on the weekly chart. That would make higher prices likely next week.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market has been rallying overnight. Day traders have only been buying.
While the EURUSD has been sideways for a few hours, the trading range is only 15 pips tall. That is not enough for most bears to begin selling yet.
The overnight high is exactly at Tuesday’s high, which was the top of a possible wedge bear flag. It is also just below the resistance of the September 2018 high.
The bears would like to get a reversal down from here. Today would then be a sell signal bar on the daily chart for a micro double top.
But with the pullbacks for 3 hours being less than 15 pips, it is more likely that today will break above Tuesday’s high. The September 2018 high is only 8 pips higher. If the EURUSD breaks above Tuesday’s high, it will probably continue to at least a little above the September 2018 high as well.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
I will post chart after the close.
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 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 gapped up and rallied from a wedge bull flag near the EMA. There was a brief, strong breakout to a new high and then another trading range. Today was a trending trading range day.
It is important to note that today was the 2nd consecutive daily close above the September 16 top of the month-long trading range. That increases the chance of at least slightly higher prices early next week.
Furthermore, this week closed on its high. There were several gaps up on the weekly chart over the summer, even though most gaps closed. There is an increased chance of a gap up next week.
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.
