Emini and Forex Trading Update:
Wednesday October 16, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini began yesterday with a bull trend from the open. This then evolved into a trading range after testing above 3,000, last week’s high, and the open of the month.
By going above last week’s high, the Emini triggered a weekly buy signal. However, there were 3 bear bars and then a tail on top of last week’s bar. This is a weak buy setup. Since the Emini is at the top of a 4 month range, the context is not strong either. Therefore, the upside will probably be limited over the next week.
Nothing has changed from what I have been saying since June. The odds still favor a new high, but it might not come in October. Currently, the Emini is stuck in a trading range and the bulls on the daily chart need several bull bars before traders will conclude that the bull trend is resuming.
Overnight Emini Globex trading
The Emini is down 6 points on the Globex chart. By going above last week’s high, the Emini triggered a buy signal on the weekly chart.
Since the signal was weak, traders expect a pullback below last week’s high. If the Emini opens where it is currently trading, it will open very close to last week’s high. It might oscillate here today as traders decide whether the weekly buy signal will succeed or fail.
Yesterday was the 1st strong trend day in 7 days. Yet, the Emini spent most of yesterday in a trading range. Today will likely open within yesterday’s range. If so, day traders will expect at least some continuation of that range.
The 60 minute chart has not touched its 20 bar EMA in more than 20 bars and its 3 day rally is not particularly strong. That is somewhat unusual and it makes a touch likely today or tomorrow. That will probably limit the upside today.
Yesterday’s early rally was strong enough to make a big bear day unlikely today. That leaves trading range price action. Day traders will expect at least one swing up and one swing down today, like the Emini has been creating for the 6 days prior to yesterday.
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 pullback on Monday in a weak rally. When yesterday traded above Monday’s high, it triggered a weak High 1 bull flag buy signal.
The 3 week rally has lacked consecutive big bull bars closing near their highs. Most bars overlapped prior bars and had prominent tails. This looks like a bull leg in a month-long trading range and not the start of a bull trend.
The daily chart is still in its 2 year bear channel. Bear channels often have 1 – 2 month trading ranges like this. However, every prior trading range led to a new low. Because there are magnets below at around 1.08, this rally will probably be another bear rally.
Since there is a small wedge bottom on the weekly chart, the rally will probably have at least one more leg up after the 1st 1 – 2 week pullback. Consequently, traders expect a test of the September 13 high or even the August high within a month. This is true even if there is a test of the September double bottom first.
Overnight EURUSD Forex trading
Yesterday was an outside up day on the daily chart. But it was a doji bar in a 3 day tight trading range. That is not a strong buy setup.
Today traded above yesterday’s high and pulled back. The 5 minute chart has been in a 30 pip trading range around yesterday’s high. Since yesterday is not a strong buy setup on the daily chart, today will probably not be a big bull day.
Also, there is no sell setup and therefore today will probably not sell off. Day traders are expecting a continuation of the 3 day tight trading range. They will continue to look for small reversals and 10 pip scalps until there is a strong breakout up or down.
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
Today was a trading range day. The Emini rallied after a small double bottom on the open. It then sold off from a double top. The 60 minute chart had not touched its 20 bar EMA for about 25 bars, even though the 60 minute rally has not been strong. That EMA was a magnet below that limited today’s upside potential. The Emini will probably trade below it at some point tomorrow.
Today is an inside bar on the daily chart. It is therefore both a buy and sell signal bar. The bulls see a High 1 bull flag and the bears see a 3 week wedge rally. With 6 of the past 7 days having reversals, traders are not expecting a strong trend tomorrow.
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.
