Emini and Forex Trading Update:
Monday February 3, 2020
I will update again at the end of the day.
Pre-Open market analysis
The Emini sold off strongly on Friday after Thursday’s strong rally. January closed near its low. It is a sell signal bar on the monthly chart. The sell signal will probably trigger early this week.
However, it followed 4 bull bars closing near their highs on the monthly chart. This is therefore a weak sell setup. The best the bears will probably get is a 1 – 2 bar pullback. Since that is the monthly chart, the pullback will probably last a few weeks to maybe a couple months.
I wrote a few weeks ago that the minimum goal for the bears was 5%. Nothing has changed. What is unknown is the path. Because of the strong 4 month rally, there will be bulls buying every selloff. Therefore, if the Emini continues down, it will probably have a lot of trading range price action along the way.
Overnight Emini Globex trading
Today is the follow-through bar after Friday’s big bear breakout. The bears want a bear bar. That would increase the chance of lower prices. The bulls want a strong reversal up today. They want Friday to be a bear trap. The odds still favor lower prices even if the bulls get a bounce this week.
Because Friday was a sell climax, there will probably be at least a couple hours of sideways to up trading today that begins by the end of the 2nd hour. Because Friday was so extreme, there is an increased chance that today will be a trading range day.
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 daily chart of the EURUSD Forex market rallied strongly on Friday from the bottom of a 4 month trading range. The bulls see a double bottom with the November 29 low.
However, the bear channel was tight. Also, on the weekly chart (I showed it on my Weekend Update), the 4 week selloff had only one leg down. Every other swing up and down for almost 2 years had at least 2 legs. Consequently, traders should expect a test of the November low within a couple weeks before there is a move back up to the top of the range.
It is important to note that last week formed a strong buy signal bar at support on the weekly chart. Today’s high came to within a fraction of a pip of last week’s high, but failed to trigger the buy signal. But after 4 consecutive bear bars, the 1st reversal up will probably be minor.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market rallied strongly on Friday but sold off overnight. There was a 6 hour trading range early in today’s session, a 20 pip bear breakout, and now a 2nd trading range. Today is therefore so far a Bear Trending Trading Range Day.
While it is a bear trend day, most of the time has been within trading ranges. This trading range price action usually limits how far the day will go from this point.
The bears want another leg down. But today has already retraced half of Friday. Also, today’s bars are small and the 2 trading ranges were only about 10 pips tall. That reduces the chance of much lower prices.
The bulls would like a reversal back up into the upper range. Today would then be back at last week’s high. That would increase the chance of triggering the weekly buy signal today or tomorrow.
With the small bars and tight ranges today, today will probably not go far up or down. There is a chance of a brief 20 pip breakout up or down. Day traders will scalp unless there is a surprisingly strong breakout, which is unlikely.
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
Today rallied strongly on the open. It was a strong enough rally to be a Bull Major Surprise breakout. That made a bear trend day unlikely.
However, there was a bear trend after the 1st hour. It was a bear leg in what became a trading range day. It was strong enough to make a bull trend unlikely. With both a both and bear trend unlikely, the day entered a trading range.
Today was an inside day on the daily chart and the Emini has been sideways for 6 days. It is in Breakout Mode.
Since a 5% correction is likely, this week will probably trade below the January low. That would trigger the monthly sell signal. But after 4 strong months up, the sell signal is minor. Consequently, the bears will probably get a 5 – 10% pullback over the next 2 weeks to 2 months and then the bulls will buy for a test of the all-time high.
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.
