Emini and Forex Trading Update:
Thursday October 24, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini had an outside down bar on Tuesday. Yesterday triggered the sell signal by going below Tuesday’s low. However, yesterday reversed up and closed on its high. It is therefore a High 1 bull flag buy signal bar for today. The bulls have a 50% chance of a new all-time high in October, and a 60% chance of one within a few weeks. October might form an outside up month on the monthly chart and make a new all-time high.
The reason the probability is not higher is that the Emini is just below the September high and all-time high, which is resistance. Furthermore, the Emini has been sideways for 7 days. That is not a strong environment for traders looking for a successful breakout. But, it is strong enough to make a new high likely soon.
Until there is a breakout, there is no breakout. Consequently, the bears have a 40% chance of reversing down and closing the gap above the October 10 high before there is a new all-time high.
Overnight Emini Globex trading
The Emini is up 4 points in the Globex session. It might therefore gap up this morning. That would trigger the buy signal on the daily chart. But the Emini is still near the top of a 7 day tight trading range. While the bulls have a 50% chance of a new high this month, the tight trading range could easily continue for several more days.
After yesterday’s strong reversal up, today will probably be sideways to up, at least for the 1st couple hours. The 1st reversal down from a strong rally is typically minor. Therefore, the bears will probably need a double top before they can get a bear trend today. Because of the context on the daily chart, traders expect that the best the bears will get today is a trading range.
Since the Emini is at the top of a 21 month trading range and the momentum up on the daily chart is good, there is the potential for a strong breakout. If so, the bulls could soon create a series of bull trend days.
In the meantime, traders will buy reversals up from selloffs. They will continue to do that unless the bears get a strong reversal down with follow-through on the daily chart.
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 triggered a buy signal today by going above yesterday’s high. However, it then reversed down after testing near Monday’s buy climax high.
I have been saying that this would probably happen because most reversals down come from a micro double top. Also, a 1 – 3 week pullback is likely after a parabolic wedge buy climax to resistance. This is a good candidate for the start of the pullback. However, there might be one more brief new high before the profit-taking begins.
If today closes below its midpoint, it will be a credible sell signal bar for the pullback. Many bulls will exit below today’s low, expecting around a 50% pullback to below the EMA and possibly down to the October 15 low of 1.0991.
But the 3 week rally was the strongest one in the 21 month bear trend. And it came from a nested wedge bottom. Consequently, traders expect at least a small 2nd leg sideways to up after the pullback. The bulls will look to buy a reversal back up from around a 50% pullback after 1 – 3 weeks.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart broke above yesterday’s high overnight. This triggered a weak buy signal on the daily chart. But the breakout was small and there was a reversal down from around Friday’s close. That was the highest close in the 3 week buy climax.
Today is now a potential sell signal bar for tomorrow. If today closes near its low, the bears will have a credible micro double top after a buy climax on the daily chart.
The past 3 days were small and sideways. Today so far is also small. Even if today closes on its low, it will not be a strong sell setup. However, the daily chart is likely to begin to work down for a couple weeks.
The bears want a resumption of the 21 month bear trend and not just a pullback in a bull trend. Their odds would improve if today closes on its low. As a result, they will sell 20 pip rallies.
Since the bulls want at least one more new high in the rally, they will buy reversals up from the low of the day. They probably will not be successful. The best they probably can get over the next week is a brief new high.
Traders expect sideways to down trading for a couple weeks. The bulls will buy reversals up for small rallies and then take profits. The bears will sell reversals down from the rallies. Since they do not expect a bear trend, they will take profits around the most recent low.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
I will post chart after the close.
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 gapped up and triggered a buy signal on the daily chart. But it sold of sharply on the open. The day went sideways and formed a triangle. The bulls got a weak trend reversal up at the end of the day
For the bears, its another reversal down from above a prior high. In this case, it is a reversal down from above Tuesday’s high. But it closed around the middle and it is therefore a weak sell signal bar for tomorrow.
Since the daily chart has been sideways for a couple weeks, traders are looking for reversals. This might continue up to next Wednesday’s FOMC announcement.
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.
