Emini and Forex Trading Update:
Wednesday January 15, 2020
I will update again at the end of the day.
Pre-Open market analysis
Everybody knows that the Emini is in a buy climax on the daily chart. On the 5 minute chart, there was a huge Bear Major Surprise Bar yesterday at 10:40 pm PST. It was big enough to possibly affect the next several days. A bar like that is always news related. Here, it was due to the China tariffs.
However, yesterday’s rally up from a new low of the day and the 60 minute EMA was big enough to create confusion. Confusion typically results in some trading range price action, as it did over the final half of yesterday. The day was a bull doji day on the daily chart, which is a trading range day.
As good as the one bar selloff was for the bears, there is no top yet on the daily chart. The bulls will continue to buy 1 – 3 day selloffs.
Overnight Emini Globex trading
The Emini is down 6 points in the Globex session. It will therefore probably open within yesterday’s range.
Yesterday was a doji bar on the daily chart, which represents a neutral market. It was a pause in a strong bull trend on the daily chart.
Most days over the past several weeks have had relatively big ranges and at least one swing up and one swing down. Since the daily chart is in a strong bull trend, there are more rallies than selloffs and the rallies have been bigger. Day traders will expect that price action to continue again today.
However, the daily chart is in a buy climax. There is therefore an increased chance of either a surprisingly big 1 – 3 day rally to a blow-off top or a big selloff and the start of a 2 – 3 week pullback.
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 daily chart of the EURUSD Forex market is trying to reverse up from a 2 week selloff. However, last week’s buy setup was weak. Furthermore, there are still strong magnets below. Consequently, this rally will probably form a lower high. Most bulls would like to see the December higher lows tested before concluding that the selling has ended. However, if there is a Bull Surprise Bar within the next few days, the odds will shift in favor of a test above the January 1 high.
I said yesterday that there would probably be buyers below Monday’s low. This was because Monday was a bull bar and therefore a weak sell signal bar. The bulls hope that Friday was the end of the 2 week selloff. They therefore see the 4 day rally as an early bull trend.
Yesterday was a pullback in that trend. But yesterday was a bear bar and the 4 day trend up has been week. Yesterday is therefore a weak buy setup and there will probably be more sellers than buyers above its high.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market rallied 25 pips overnight. By going above yesterday’s high, the EURUSD triggered a buy signal. However, since the signal was weak, there were likely going to be more sellers than buyers above yesterday’s high.
So far, that has been the case. After a brief break above yesterday’s high, the EURUSD stalled and pulled back.
While it is still possible for the bulls to surge strongly above yesterday’s high later today, it is more likely that they will not. Last week’s weak bottom on the daily chart and the 4 day weak rally make it more likely that the EURUSD will continue down at least to the December 20 low.
There has been no energy for 5 days. Forex day traders expect a continuation of that trading range price action again today. They will look to sell reversals down and buy reversals up, and scalp for 10 – 20 pips until there is a strong breakout up or down.
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
The Emini raced up on the open, and as was likely, it then entered a trading range. The bulls again failed to break above the 3,300 Big Round Number. After selling off to a new low, the Emini bounced and closed in the top half of the range.
The late rally is a sign that the bulls will try again tomorrow to break above 3,300. The downside risk is small since the bulls have bought every 1 – 3 day pullback for 3 months.
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.
