Emini and Forex Trading Update:
Tuesday October 15, 2019
I will update again at the end of the day.
Pre-Open market analysis
Yesterday traded below Friday’s low, which triggered a minor sell signal on the daily chart. Since yesterday was a small trading range day, it was a weak entry bar for the bears.
It was the 2nd consecutive doji bar on the daily chart. The bears need follow-through selling today to convince traders that last week’s rally has ended.
Yesterday was a pullback in a 2 week bull trend. It is therefore a buy signal bar for today. Since it was only a small bull doji and Friday was a doji, it is a weak buy setup.
The bulls also have a weak buy signal bar last week on the weekly chart. The bulls need a rally above last week’s high to trigger the buy. But after 3 bear weeks, there will probably be sellers not far above last week’s high.
The Emini is in the middle of a 4 month trading range. Every day for over a week has had at least one reversal. Yesterday was a small trading range day. Traders expect more trading range price action again today.
Overnight Emini Globex trading
The Emini is up 8 points in the Globex session. It might gap above yesterday’s high on today’s open. That would trigger the High 1 bull flag buy signal on the daily chart.
But a small gap up after a day-long tight trading range is not especially bullish. The bulls need consecutive big bull bars closing near their highs to make traders believe that today will be a bull trend day.
If today goes above yesterday’s high, the bears will try to get an early reversal down. Since yesterday’s range was small, they will try to create an outside down day. That would increase the chance of lower prices later this week.
After a 2 week rally and without a clear top, the odds favor at least slightly higher prices. But the past 6 days all have had at least one reversal. Therefore day traders will expect more trading range price action again today unless they see a strong move up or down in the 1st hour or so.
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 had a bear inside bar yesterday in a weak rally. It was a Low 2 sell signal bar and a High 1 buy signal bar. Since it had a bear body and the rally was weak, there were likely to be sellers above its high.
Today traded above yesterday’s high and reversed down to below yesterday’s low. As a result, it triggered the buy signal, which so far has failed. In addition, it now has triggered the sell signal.
The daily chart has been in a bear channel for almost 2 years. Bear channels typically have occasional 20 – 50 bar trading ranges as the bear trend continues. The EURUSD daily Forex chart has been in a trading range for a month.
The bears hope that this 3 week rally has ended and the bear trend is resuming. But there is still room to the top of the trading range at the September high. It is therefore more likely that any selloff from here will last only a few days and form a higher low. Traders should expect a test above 1.1100 before the bears will consider aggressively selling again.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart went above yesterday’s high and then reversed down 50 pips to below yesterday’s low. Today is therefore an outside down day.
The selloff was a Bear Spike and Channel pattern. That typically converts into a trading range after 3 – 4 legs down. Fifteen minutes ago, there was a small reversal up from a 3rd leg down. The bulls have been unwilling to buy for 6 hours. If the small reversal up grows to 20 or more pips, the bulls will begin to buy pullbacks. They need some sign that the selling has ended and that the bear channel is evolving into a trading range.
However, the pattern and the day’s range are small. Consequently, today will probably not be a big trend day, despite selling off for 6 hours. More likely, the bear channel will stall, bulls will buy reversals up for 10 – 20 pip scalps, and the bears will sell 20 – 30 pip rallies for 10 – 20 pip scalps.
The key price today is yesterday’s low. If the bears can get today to close below yesterday’s low, the odds will favor lower prices over the next few days. Alternatively, if today closes near the open, the EURUSD will probably trade sideways for at least another day.
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 bull trend from the open today. It broke above the open of the month, last week’s high, and the 3,000 Big Round Number. It then formed a parabolic wedge buy climax and went sideways of the remainder of the day.
This area has been resistance for months. Therefore, the bulls will need several bull bars on the daily chart to convince traders that the bull trend is resuming. Without that, traders will expect limited upside and more sideways price action.
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.
