Emini and Forex Trading Update:
Monday September 16, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini stalled on Thursday and Friday just below the all-time high. In addition, the 3 week rally has had 3 legs and it is therefore a wedge. This makes a 1 – 3 day pullback likely early this week. However, the momentum up is good enough to make a new all-time high likely within a couple of weeks.
Overnight Emini Globex trading
The Emini is down 10 points in the Globex session. It therefore will probably gap down below Friday’s low. Since a pullback is likely on the daily chart, day traders will look to sell rallies.
For example, they will look for a reversal down from around Friday low and the 60 minute EMA. Friday’s close is just above. That is also the close of last week. Since the bodies have been shrinking for 3 weeks on the weekly chart, day traders will look for a reversal down from around last week’s close.
If there is a gap down, there probably will be an early attempt to close the gap. I wrote on Friday and over the weekend that a pullback was likely this week. Therefore day traders will look from an opening reversal down from an early double top or wedge rally to the resistance above.
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 was sideways in August, but it is still in a year long bear channel. There has also been a 3 month bear channel since June 25 within that bigger channel.
Thursday’s reversal up was from a double bottom at the bottom of both channels. Friday then reversed down from a double top at the top of the 3 month channel. A double top and a double bottom in a trading range is a Breakout Mode pattern. That means the probability for the bears and bulls is just about the same over the next several days. Traders will look for at least one more reversal.
Friday had a bull body after a big bull reversal up on Thursday. That follow-through makes at least a small sideways to up leg likely this week. Consequently, the bulls will look to buy around a 50% pullback from the 2 day rally.
However, when the market is in a Breakout Mode pattern, the odds never greatly favor one side. Therefore, traders know that the 2 day reversal down could easily break below the double bottom. Since the daily chart is in a bear trend and there are measured move targets and a gap below at around 1.08, the odds favor lower prices. This is true even if the bulls get a rally up to the August lower highs first.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart sold off in a tight bear channel overnight. Traders have only been selling.
The 5 minute chart is almost to a 50% retracement of the 2 day rally. As a result, the bears will begin to take profits. That profit-taking will probably begin within a couple hours.
Once there is a 20 pip rally, the bears will switch to selling rallies from selling at the market. Furthermore, they will begin to take profits near the most recent low instead of holding for a further swing down.
Also, the bulls will begin to buy reversals up from near the most recent low. Both will scalp. This buying low and selling high should convert the tight bear channel into a trading range early in the US session.
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
By trading below Friday’s low, the Emini triggered a sell signal on the daily chart today. There is a wedge top. But the bull channel is tight and therefore traders expect only a minor reversal down. Today sold off for the first half and then rallied for the 2nd half. The day remained small and it was a trading range day.
Today closed near its high and is a High 1 bull flag buy signal bar on the daily chart for tomorrow. But, the Emini will probably stay mostly sideways into Wednesday’s 11 am PST 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 Intraday Market Update page.
