Intraday market update: Tuesday April 2, 2019
I will update again at the end of the day.
Pre-Open market analysis
Yesterday had a big gap up, but then a weak bull trend. By going above last week’s high, the Emini triggered a weekly buy signal. The rally broke and closed above the March 22 high of the year as well.
If the bulls get consecutive closes above that high, especially if today closes far above, the odds will favor a new all-time high within the next 2 months. Otherwise, the odds will still favor a 2 month pullback before the new all-time high.
Overnight Emini Globex trading
While yesterday was not a strong bull trend day, it was relentless. The odds still favor a continuation of the yearlong trading range. This is true even if there is a break to a new all-time high. However, the bulls have not yet begun to take profits. Consequently it is still easier for a day trader to make money on the long side.
The Emini is up 2 points in the Globex session. Yesterday broke above the March 21 high, which is resistance. Today is the follow-through day. A 2nd close above that resistance increases the chance of a test of the next resistance. That is the all-time high.
Because the daily chart is in a trading range, there is an increased chance of disappointing follow-through today. That means an increased chance of a bear candlestick on the daily chart. Consequently, day traders will look for a major trend reversal down on the 5 minute chart at some point today. Their minimum goal will be a close below the open.
Since yesterday was not a strong bull trend day, the odds are against a big bull trend day today. There will probably be a transition into a trading range or a bear swing by the end of the 2nd hour.
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. 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 has sold off for 10 days after rallying for 10 days. Every trading range has both a credible buy and sell signal. Here, in the current 4 month range, there is now a double top and a double bottom over the past month. Traders are waiting for more information from Brexit before they are willing to bet on the direction of the breakout.
Every leg up and down for 4 months has reversed after about 2 – 3 weeks. This selloff has lasted 2 weeks. Since it is now at the bottom of the range, the bears will probably take profits soon and the bulls will look for a reversal up to buy.
Because this is the longest trading range in over 2 years, the breakout will probably come soon. There is a 50% chance of the breakout being up and a 50% chance of it being down. Until there are consecutive closes above or below the range, the odds continue to favor reversals. Every leg up or down is more likely to reverse than break out, even though one will eventually break out.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been in a bear channel on the 4 hour chart since March 25. A bear channel has a 75% chance of a bull breakout. That means the odds favor a break above the bear trend line this week.
At that point, the bulls will try for a rally and either a bull trend or a bull leg in a trading range. The bears, however, want the breakout to go sideways and form a bear flag.
The daily ranges have been small during the US sessions over the past week. Day traders have been scalping. The overnight range has only been 20 pips. That makes it difficult for scalpers to make money. Traders are waiting for news from Brexit, which can come at any time.
Since the chart has sold off to the bottom of the 4 month range and there is a bear channel on the 240 minute chart, the bulls are looking to buy a reversal up. Day traders know this and will look for a reversal up, hoping for a 30 – 50 pip swing up. They would also swing trade a strong selloff, but a successful break below the 4 month range on this particular selloff is less likely than a reversal 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. 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
As I mentioned before the open, today was likely to have at least 2 hours of trading range price action. This was because yesterday’s rally was weak.
Today was the 1st pullback in a 12 bar bull micro channel on the 60 minute chart. The odds therefore are that the Emini would test above Monday’s high this week. It did so at the end of the day. However, once there is a new high, traders will begin look for a deeper pullback from the 60 minute bull micro channel over the next few days.
There is now a wedge top on the daily chart. Because today closed near its low, it is a sell signal bar for tomorrow on the daily 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.
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.
