Emini and Forex Trading Update:
Monday May 17, 2021
Pre-Open market analysis of daily chart
- Strong 2-day reversal up from sell climax, to below bottom of 4-week trading range.
- 3-day island bottom. Bulls looking for May V-bottom pattern.
- Bulls want May V-bottom, and for rally to continue up to new high. After 2 strong bull days, the Emini will probably pull back for a day or two.
- Bears want rally to form lower high or double top.
- 2-day rally was strong enough to make the chance of a new high in May, slightly greater than of a reversal back below the May low.
- Still should get at least a 10% correction this summer, even if new high first.
Overnight Emini Globex trading on 5-minute chart
- Down 20 points in the Globex session, and today will probably open near mid Friday’s range.
- Friday was a buy climax. There is therefore a 75% chance of at least a couple hours of sideways to down trading today, that starts by the end of the 2nd hour.
- Sometimes the day after a big bull day opens near the low of the bull day, and then forms a big bear day. The big bull day then becomes a big bull trap. Increased chance of big bear day today.
- With today probably opening mid range, but nearer Friday’s low, buyers from Friday will be trapped into bad longs. Many will try to get out on a rally today. This reduces chance that today will be a 3rd consecutive big bull day today.
- With Thursday and Friday being big bull days that reversed up from below the month-long trading range, there is a reduced chance of a big bear day today.
- If today will probably not be a big bull or big bear day, it will likely spend a lot of time going sideways. There should be at least one swing up and one swing down.
- Strong trend days can come at any time, even when they are unlikely. If there is a series of strong trend bars up or down in the 1st hour, traders will conclude that today might be forming a trend day.
Friday’s Emini setups
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- Reversal up from double bottom pullback on Friday (April 22 and May 5 double bottom).
- Bulls want rally to break above February 5 top of 5-month trading range, and then above January high, but need strong bull day today or tomorrow.
- Bears want reversal down today or tomorrow from lower high, after last week’s wedge rally to a double top
- April rally is strong enough to make at least slightly higher prices likely.
- But, most attempts to break out of a trading range fail. Therefore, rally will probably not get much above the May 11 high, before starting a 2-week pullback.
- Trading range since mid-April, and it is within trading range since early February. Weekly chart is also in a 10-month trading range.
- Trading ranges resist breaking out, so traders expect strong moves up and down to reverse.
- Only 2 consecutive strong bull days since April 8, despite strong rally. If this is going to finally break above all of the trading ranges, the bulls need to start to get streaks of consecutive bull bars. Otherwise, traders will continue to look for reversals.
Overnight EURUSD Forex trading on 5-minute chart
- Rallied above Friday’s high, but then reversed back down to below the open.
- Selloff has been strong enough, so that today will probably not make a new high.
- Bears want selloff to continue down, so that today will be a big bear day closing on its low. Today would then be a higher probability sell signal bar for tomorrow.
- More likely, today will stop going down, and evolve into a trading range.
- Bears will sell rallies and try to get today to close near its low. The bigger the bear body, the more likely tomorrow will be lower.
- Bulls will buy reversals up from selloffs and try to get today to close above the midpoint of the day’s range. That would increase the chance that today is just a pullback from Friday’s rally. It would increase the chance of higher prices tomorrow or Wednesday.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
- The Emini gapped down and rallied for a couple bars.
- It then sold off in an Opening Reversal down from that buy climax for 4 hours in a weak bear channel.
- Bulls got lower low major trend reversal up from small Final Bear Flag and a failed breakout below the bottom of today’s trading range, the 60-minute EMA, and the midpoint of May’s range.
- The rally got back to the open of the day, which is common in trading range days.
- The rally was a 2nd leg bull trap, which is also common in trading range days.
- After pulling back a little, the rally resumed and today closed just above the open.
- The Thursday/Friday rally was so extreme that the pullback might last for another day or two before the bulls will buy aggressively again.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
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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.