Trading Update: Monday October 11, 2021
Emini pre-open market analysis
Emini daily chart
- Friday triggered a weak Low 2 sell signal. With Friday closing near its low, there is an increased chance of at least slightly lower prices today.
- Bears want gap down today or this week so that there would be an island top after a 7-day island bottom. However, island tops and bottoms are usually minor patterns and do not lead to trends.
- Middle of month-long trading range between 50- and 100-day moving averages.
- Middle of 4-month trading range.
- Friday is also an Emini weak High 1 buy signal bar because it has a bear body and the Emini is in the middle of a trading range.
- September 23 is a major lower high and it is near 50-day MA. Both are magnets above.
- 50% chance that a 15% correction has begun.
- 50% chance of new high before there is a 15% correction.
- Two quiet days in middle of 4-month trading range reduces chance of big trend today.
- Trading range is Breakout Mode so big breakout can begin at any time.
Emini 5-minute chart and what to expect today
- Emini is down 5 points in the overnight Globex session so today might gap down.
- That would create a 2-day island top, but since it the Emini is in the middle of a month-long trading range, it has little predictive value.
- If today gaps down, the gap will probably be small. Small gaps typically close early in the day.
- There have been a lot of reversals for two days. That reduces the chance that today will be a big trend day in either direction.
- Traders should expect a test of the 50-day MA this week. Thursday’s high did not quite reach it. Therefore, there should be at least one bull trend day this week.
- However, the Emini might test the 100-day MA and the top of last week’s 4-day tight trading range at around 4,350 first.
Friday’s Emini setups
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- 2 climactic legs down below August 20 low so might get profit taking.
- Tight trading range for 4 days in tight bear channel so small Breakout Mode pattern.
- Today so far is a small inside day and the 3rd consecutive small day. That reduces the chance of a big move up or down today.
- Bulls see micro double bottom and bears see micro double top (Thursday and Friday’s highs).
- Since tight bear channel since September 3 high has lasted more than 20 bars, and there are magnets below, 1st reversal up will likely be minor.
- Magnets below are March 9, 2020 high and June 10, 2020 high, which are breakout points in the strong 2020 rally.
- There is also a measured move target there, based on the July 30/September 3 double top.
- EURUSD is close enough to support for it to reverse up at any time.
- It is currently likely to dip below the March 9, 2020 high before there is a rally lasting several weeks to above the August 20 low and maybe to the September 3 high.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
- Small gap down closed on 1st bar, then got streak of 12 bars without a bear body.
- Major Bull Surprise on bars 3, 4, 5, and 6. That made bear trend day unlikely (but today’s bear trend was big enough so that today became a bear trend day anyway).
- Early rally went above Friday’s high, making today an outside up day.
- Reversed down strongly from a lower high major trend reversal.
- Sold off to below yesterday’s low, becoming an outside down day after being an outside up day.
- Closed near the low of the day and closed the gap above Wednesday’s high.
Big sell climax day so 75% chance of at least a couple hours of sideways to up trading beginning by end of 2nd hour tomorrow.
- Bears hope Thursday was a lower high double top on the daily chart with the September 28 high and that the 2-day selloff is a resumption of the bear trend that began with the September 2 high.
- 50% chance that a 15% correction began on September 2.
- Thursday’s high did not quite reach the 50-day MA, and traders might want to see a better test before they will be willing to sell aggressively again.
- In trading range since July. Traders are deciding if a 15% correction is underway or if the September selloff is just a pullback in the 18-month bull trend.
- With today closing near its low, there is increased chance tomorrow will gap down. That would create a 3-day island top.
- Next important magnet below is the open of the month. October or November should be a 2nd bear bar on the monthly chart.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
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 Time
When I mention time, it is USA Pacific Time. The Emini day session charts begin at 6:30 am PT and end at 1:15 pm PT which is 15 minutes after the NYSE closes. You can read background information on the market reports on the Market Update page.