Emini and Forex Trading Update:
Monday April 12, 2021
Pre-Open market analysis of daily chart
- Strong bull trend, but getting too strong.
- Last week closed on its high so might gap up this week (today).
- 11 consecutive bull bars is rare and therefore climactic.
- 11-bar bull micro channel is rare and therefore climactic.
- 3-week parabolic wedge so buy climax.
- Extreme buy climaxes can last a long time, but usually soon attract profit takers. Once profit taking begins, it is sometimes big and fast, like September 3, 2020.
- Probably profit taking soon, and increased risk of big bear day this week.
- 11 consecutive bull bars and bull micro channel mean strong bulls. Bulls normally buy 1st 1- to 3-day pullback. But this buy climax is so extreme, that there is an increased risk of a 2-week selloff coming at any time.
- April might be putting in the high for the next several months, and possibly for the year.
- No top yet so traders keep buying, but they know a sharp reversal can come at any time.
Overnight Emini Globex trading on 5-minute chart
- Up 2 points in Globex session.
- Friday ended with brief, sharp selloff after extreme rally. Big Up, Big Down creates Big Confusion. Confusion is a hallmark of a trading range, so increased chance of trading range open.
- After extreme buy climax on daily chart, and at end of day on 5-minute chart on Friday, reduced chance of big bull day.
- Also, increased chance of big bear day at some point this week. If today is going to be bear day, probably will need to have 1- to 2-hour trading range first, so that bears could create major trend reversal.
- If series of strong trend bars up or down in 1st hour, then increased chance of trend day. Early trading range likely, and big bull day unlikely.
- Day after extreme buy climax day has 75% chance of at least a couple hours of sideways to down trading that starts by end of 2nd hour.
Friday’s Emini setups
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- 4-day tight trading range in 3-week rally from wedge bottom. Tight trading range late in rally often is Final Bull Flag, so increased risk or reversal down within a few days of breaking above bull flag.
- March 18 high was start of final leg down in 2-month wedge bottom, and it is a magnet above.
- Since rally has 3 legs up in a tight bull channel, it is a parabolic wedge buy climax. That usually will soon attract profit takers, but might reach March 18 high first.
- Bears want reversal down from double top with March 18 high, and then resumption of 4-month bear trend.
- Rally is reversal up from 2-month wedge bottom. Usually will get higher low and 2nd leg up. Bulls should buy 1- to 2- week pullback for 2nd leg up.
- Trading range likely for at least another month.
Overnight EURUSD Forex trading on 5-minute chart
- Sold off early in overnight session, but reversed up from above Friday’s low. Now testing Friday’s high.
- 4 sideways days in tight trading range. So far, today is 2nd consecutive inside day.
- After strong overnight reversal up in 3-week bull trend, bear trend is unlikely today. Bulls should buy pullbacks.
- Near top of 4-day tight trading range, and today’s range is already an average size. Reduced chance of strong continuation of overnight rally. Bulls have been buying at the market, and swing trading, but will probably soon switch to buying pullbacks and scalping.
- Sideways for 3 hours but biggest pullback has been less than 20 pips. Day traders are still more interested in buying, but since in trading range, some will begin to look to sell reversals down for scalps.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
- Early bear channel reversed up from wedge bottom at around a 50% pullback from Friday’s rally.
- 2nd Leg Bull Trap and failed breakout to new all-time high. Midday reversal with Micro double top and higher high major trend reversal led to selloff down to open of day.
- Reversed back up to a new high, and today was another trading range day that closed near its high.
- This is now a streak of 12-day bull bars on the daily chart. It is the longest streak since the 15-day streak that ended in February 2011. That led to a 24% correction 8 months later.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
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 Time
When I mention time, it is USA Pacific Time (the Emini day session opens at 6:30 am PT, and closes at 1:15 pm PT). You can read background information on the intraday market reports on the Market Update page.