Emini and Forex Trading Update:
Tuesday March 16, 2021
I will update again at the end of the day.
Pre-Open market analysis
The Emini formed a bull bar that closed near its high yesterday, and this is within a strong 8-day rally (Emini triggered High 1 buy signal). The bulls want the Emini to break strongly above 4,000 this week. With yesterday closing near its high yesterday, today will probably trade at least a little higher. It might even gap up, and It should test 4,000 today or tomorrow.
The bears hope that today sells off. That would create a micro double top with Thursday’s high and a double top with the February 16 high. However, today they would need the Emini to close on its low to attract sellers tomorrow, given how strong the 8-day rally has been. Traders expect higher prices.
It is important to note that there is an FOMC announcement 11 am PST tomorrow. Financial markets often get neutral and quiet ahead of the report. That slightly reduces the chance of a big trend day today.
Overnight Emini Globex trading
The Emini is up 4 points in the Globex session. It might gap up today. If it does, the gap will probably be small. Small gaps typically close in the first hour.
Yesterday had a climactic rally into the close. While that is a sign of strong bulls, it typically will attract some profit taking. 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 today.
Also, the day after an extreme buy climax day only has a 25% chance of being another strong bull trend day. If today is a bull trend day, it will more likely be a weaker type, like a bull channel of a Trending Trading Range Day.
That big rally at the end of the day was a breakout. A move like that typically leads to a measured move up or down within a few days. Up is more likely. However, 20% of the time, it is a bull trap, and immediately reverses down. In this case, it was yesterday’s second leg up. If it were to reverse down on the open, the rally would be a 2nd Leg Bull Trap.
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. 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 so far, has a bull inside day today. If today’s low remains above yesterday’s low, the bears will see today as the 2nd sell signal bar in 4 days. Today would then be a Low 2 bear flag sell signal bar.
The bulls hope that last week’s reversal up will lead to a bull trend. They see the 3-day pullback as a bull flag. If today is a bull day, it would be a High 1 buy signal bar. They see last week’s rally as a reversal up from above the November 4 low. Also, the bear channel has had 3 bottoms since the January 1 low. It is therefore a wedge bull flag.
So, we have both a bull flag and a bear flag. What will happen? After a sell climax, traders expect at least a small 2nd leg sideways to up. That could mean a single bull bar. If today closes above its midpoint, it will meet the minimum expectation of traders. More bears would be willing to look to sell for another leg down.
However, after a sell climax and a 3-month selloff, traders expect the reversal to last more than 6 bars, and retrace more of the final leg down. Consequently, it is more likely that the EURUSD will go more sideways to up for at least another week. A common target is the top of the most recent leg down. That is the March 3 sell climax high. But with the EURUSD being sideways for 4 days and with the FOMC announcement tomorrow, today will probably remain small.
Overnight EURUSD Forex trading
The 5-minute chart of the EURUSD Forex market reversed up from above yesterday’s low overnight but so far has been unable to get above yesterday’s high. The reversal up was strong enough so that the EURUSD will probably hold above the overnight low. That means it should remain sideways to up for the remainder of the day.
There have been many reversals overnight. Day traders have been both buying and selling, but they have been scalping. Despite the reversal up, there is currently a 50% retracement. The EURUSD is now almost back down to the open of the day. Day traders will continue to scalp reversals up and down, unless there is a strong breakout in either direction. There is no sign of that at the moment.
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. 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 made a new all-time high, and reversed down, and then back up to the middle of the range. It was a trading range day, but closed below the open. It is now a sell signal bar on the daily chart. However, because it had a prominent tail below, it is a weak sell signal bar.
Also, the context is bad for the bears. While today is a 2nd reversal down from above the February 16 high, there is now a 9-day tight bull channel. If tomorrow reverses down, the reversal will probably be minor. That means the Emini could trade sideways to down for a couple days. It is still likely that the Emini will test the strong magnet above at the 4,000 Big Round Number.
There is an FOMC announcement tomorrow at 11 am PST. That sometimes leads to a very big move, and it can be in either direction.
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.
