Emini and Forex Trading Update:
Monday October 21, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini traded below Thursday’s low on Friday and triggered a sell signal after a 5 day wedge top. Although the Emini sold off strongly, it reversed up midday and the day closed near the open. It is a High 1 bull flag buy signal bar for today.
It was also the 3rd consecutive doji bar on the daily chart. That increases the chance of more trading range price action today.
Finally, 9 of the past 10 days have had at least one reversal. Consequently, day traders will expect a reversal at some point today as well.
However, there are bull trends on all higher time frames and the Emini is just below the all-time high. There is at least a 50% chance of a new high within the next 1 – 3 weeks.
Overnight Emini Globex trading
The Emini is up 13 points in the Globex session. It might gap above Friday’s high and the 3,000 Big Round Number. But if it does, the gap will probably be small. That lack of conviction is consistent with last week’s uncertainty and trading range price action.
Because the all-time high is always an important resistance level, there is an increased chance of either a strong rally or a strong reversal down. But most days for 2 weeks have had at least one reversal. Therefore, traders will expect at least one reversal at some point today.
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 last week had 3 big bull trend days closing near their highs. This has been the strongest rally in the 21 month bear trend. It therefore has a 50% chance of ending the trend.
When a bear channel ends, the chart typically enters a protracted trading range. The first target is the June major lower high and then the September 2018 high, which was the start of the bear channel. If the bulls are successful at ending the bear trend, the chart will probably work sideways to up for many months.
As strong as last week was, the rally is now testing lower highs in the bear trend. Those are resistance levels. However, the EURUSD might the 13 month bear trend line before pulling back.
Also, the rally was surprisingly strong and has had 3 pushes up. It is therefore climactic. A buy climax usually begins to attract profit takers. Therefore, traders will expect a pullback within a week or two.
Because the rally has been so strong, the bears will probably need at least a micro double top before they can begin a 1 – 3 week pullback. But the bulls will buy again near the 20 day EMA, which would be about a 50% retracement. It would also be near last Wednesday’s buy climax low. A buy climax low is always a magnet.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart last night traded a little above Friday’s high, which was last week’s high, but pulled back. Since the daily and 60 minute charts are in buy climaxes and in a resistance zone, many bulls will soon take profits.
Last night’s rally to above last week’s high was only 30 pips tall. The EURUSD reversed down abruptly and it has been in a tight trading range for 4 hours. This will probably last all day. Day traders have been scalping and will probably continue to scalp for at least a couple days.
The bulls will then likely get one more brief push up. The bears expect it to fail and create a micro double top. Then traders will look for a 1 – 3 week pullback.
The buy climax makes a big bull day unlikely. But last week’s rally was strong and that makes a big bear day unlikely. Consequently, today will probably be a rest day for the exhausted bulls. Also, the bears typically will need a micro double top on the daily chart before they can get a pullback in a bull trend. That might come this week.
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 small wedge bull flag at the EMA on the open, the Emini rallied in a weak bull channel. Some channels spend most of the time sideways, and this was an example.
Today was a weak entry bar on the daily chart after Friday’s weak High 1 bull flag buy signal. The daily chart still has a lower high after the September lower high. Traders are deciding if the rally will continue up to a new all-time high, or pull back and form a triangle on the daily chart first. A new high within a couple weeks is more likely.
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.
