Emini and Forex Trading Update:
Monday August 19, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini triggered a double bottom buy signal on Friday. However, the buy signal bar was a small bear doji. That is an unreliable setup. Furthermore, it followed a huge selloff on the day before and the Emini has been in a trading range for 2 weeks. Traders are therefore not looking for a big reversal up. More likely, the rally will end this week and the 3 week trading range will continue.
Even though the Emini has been sideways, the August selloff was surprisingly strong. Traders should expect a test below 2800 within a few weeks. This is true even if this rally tests to just below the all-time high.
Overnight Emini Globex trading
The Emini is up 31 points in the Globex session. Last Tuesday, there was a huge rally on the 5 minute chart on the open. A Bull Major Surprise like that usually affects the market for many days and sometimes weeks.
The selloff from that rally was deep and the Emini fell far below the low of that day. However, a selloff from a Bull Major Surprise typically results in a trading range and not a bear trend. The 2 day rally is now a bull leg in that trading range. At a minimum, it should test last Tuesday’s high.
Is the rally a resumption of the June/July bull trend? Probably not. The August selloff was a Bear Major Surprise on the daily chart. The odds still favor at least a brief selloff to below the August low.
However, there is room to last week’s double top at around 2950. That is a magnet above. There is therefore an increased chance of rally today or tomorrow up to that resistance.
Whenever there is an increased chance of a bull trend day, there is also an increased chance of the opposite. If there is an early strong selloff, day traders will be ready to swing trade their shorts.
Friday’s setups
Here are several reasonable stop entry setups from Friday. 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 sold off for 4 days but is pausing at the bottom of the 5 month trading range. Trading ranges resist breaking out. Consequently, there are probably more buyers than sellers around the August low. This is true even if there is a new low.
A rally from here would be a higher low major trend reversal. A major reversal setup generally has a 40% chance of leading to a new trend.
The probability is less in this case. There have been many major reversal attempts and attempts at bear breakouts over the past year. All have failed. Every strong selloff and rally reversed within a few weeks. As a result, traders will continue to expect reversals until there is a clear, strong breakout up or down.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart rallied 30 pips from Friday’s close, but pulled back after breaking above Friday’s high. The 1st reversal up after 4 bear days is likely to fail. Day traders will expect 2 – 3 sideways days rather than a resumption of the early August rally.
The 5 minute chart has been in a 20 pip range for the past 5 hours. That is so tight that it is difficult even for scalpers to make money. Day traders are scalping. Since the EURUSD Forex market is near the bottom of its 5 month range, the odds are that the next swing trade will be up.
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
After a big gap up, the Emini sold off for about an hour. While it rallied for several hours, it reversed down from a nested wedge top. It closed exactly at the open and today form a small doji bar on the daily chart. The Emini is just below last week’s double to around 2950. A 2nd leg down to below 2800 is more likely than a new all-time high.
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.
Hi Al, I noticed you didn’t mark a sell below 66, if you did buy above 60, was below 66 a good place to get out? or are you holding long stop below 38 out below L2 77?
thanks
Noticed that b47 reversed at the Tuesday 8/13 b81 close. Any thoughts?
Traders wanted a test of that price. The Emini sold off there last week. Would it still be resistance?
Also, Buy The Close bulls from then were relieved to be able to exit with only a small loss. They were some of the sellers today. But not much selling so the Emini will probably go at least a little higher in its search for a price where traders will eagerly sell.
Thank you for the answer! I appreciate that and your guiding experience, sir.