Emini and Forex Trading Update:
Thursday September 3, 2020
I will update again at the end of the day.
Pre-Open market analysis
Every low for the past 9 days was above the low of the prior day. This is a 10 bar bull micro channel, which is a sign of very aggressive bulls.
But it is also unusual and therefore a buy climax. The streaks of 7 and 9 consecutive bull days is also climactic. Buy climaxes usually lead to profit taking, but there is no sign of it yet. Traders should expect a 10% pullback to begin at some point in September.
Traders know that buy climaxes can go a very long way before there is profit taking. The odds therefore favor higher prices.
After a 10 bar bull micro channel, traders usually buy the 1st 1 – 2 day pullback. While a big reversal down is likely at some point, it will probably not begin this week.
There is also a 10 bar bull micro channel on the weekly chart. Therefore, traders will probably buy the 1st 1 – 2 week pullback as well.
The next target is 3704.50. That is the measured move projection from the March low to the April 29 high. There is a gap above that high created by the 2 selloffs in June.
Overnight Emini Globex trading
The Emini is down 19 points in the Globex session. Since yesterday was a strong buy climax day, traders expect at least a couple hours of sideways to down trading to begin by the end of the 2nd hour today. There is only a 25% chance of either a strong bull or bear trend today. However, there is a 50% chance of at least some trend resumption up in the 1st 2 hours.
Yesterday was a big bull bar on the daily chart and it came late in a bull trend. The day after is usually a smaller, sideways day. That is what traders will expect today.
However, they will not fight reality. If there is a series of strong trend bars up or down, they will bet on a trend. But the odds favor a sideways day with at least one swing up and one swing down.
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. I do not want the lines to be distracting. If they are longer, I make them dotted. But, they have to be visible, so I make the shorter ones solid. 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 (see Online Course/BTC Daily Setups).
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.
If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.
EURUSD Forex market trading strategies
The EURUSD Forex market on the daily chart has been oscillating around the September 2018 high for a month. Because there are higher highs and lows, the trading range is also a bull channel, which is a bull trend. But there are also 4 reversals down. When a channel has 3 or more reversals, it is a wedge, which can lead to a reversal.
Since the EURUSD has had 4 reversals down at major resistance, the odds slightly favor a bear breakout. But it is important to understand that the EURUSD would not be in the middle of the trading range if either side had a high probability of winning. It is currently slightly better for the bears, but until there is a breakout, there is no breakout, and traders are continuing to take quick profits every few days.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market dipped below the September 2018 high and below yesterday’s low but then bounced. It has been sideways for 5 hours, oscillating around these key prices. Day traders have been scalping up and down.
While yesterday was a bear day and the entry bar on the daily chart for the wedge top, yesterday had a tail on its low. It bounced at the September 2018 high. Traders are still hesitating. They are deciding whether the EURUSD will breakout above or below the August range.
There is no sustained movement up or down. Day traders are looking for reversals and small trades. This will continue until there is a series of big bull or bear bars on the 5 minute chart. Once they see that, day traders will begin to swing trade again.
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. I do not want the lines to be distracting. If they are longer, I make them dotted. But, they have to be visible, so I make the shorter ones solid. 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 (see Online Course/BTC Daily Setups).
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.
If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.
End of day summary
The Emini today crashed on the 5 minute chart to below the 3500 Big Round Number and the open of the week. It ended with a reversal up from a 4 hour wedge bottom. Therefore, tomorrow should continue up to the start of the wedge. That is the 9 am PST high, which is just below the open of the week and the 3500 Big Round Number.
If tomorrow closes below the open of the week, this week will be a sell signal bar on the weekly chart. That will make at least slightly lower prices likely next week.
The bears want a 2nd consecutive big bear day tomorrow. They hope that the 10 – 20% correction began today.
And it might have. It is more likely that the bulls will try to get the Emini back above the open of the week tomorrow, at least briefly. That could be a magnet all day.
The bulls want a strong reversal up. They hope that today was just a bear trap and that the bull trend is still intact.
Traders will find out over the next week. Will any reversal up fail after a few days?
At the moment, the odds are that today is the start of a move down to 3200 and maybe 3000. A big bull day tomorrow or 2 or 3 small bull days would shift the odds back in favor of the bulls.
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.
