Emini and Forex Trading Update:
Tuesday November 17, 2020
I will update again at the end of the day.
Pre-Open market analysis
Most of the days for 3 weeks either closed near their midpoints or their opens. This is uncommon in bull trends that go a long way. However, both Friday and yesterday closed on their highs. That increases the chance of at least slightly higher prices. The Emini will try to make a new all-time high this week.
The bears want a double top with last week’s high, but the momentum up has been strong. If there is a reversal down, traders will expect a trading range rather than a bear trend.
What about the Moderna’s news on vaccine? Everyone already knows that there will be a reasonably effective vaccine. The news yesterday just made it easier for the market to do what it wanted to do, which was to test last week’s high.
Overnight Emini Globex trading
The Emini is down 26 points in the Globex session. It will open around yesterday’s low. The bears would like it to gap down below yesterday’s low. That would create an island top and a lower high double top with last week’s high.
Remember, last week sold off strongly from around this level. The bears would then hope for a reversal down to below last week’s low and the October 12 high, which was the breakout point on the daily chart. The bears want a close back below that high. That would increase the chance that the 2-day breakout has failed.
However, if today gaps down, the gap will be small. Small gaps typically close in the 1st hour and are trivial. The bulls will look to buy a test of last Wednesday’s high, which was the neckline of last week’s micro double bottom. They are hoping for a reversal up from below yesterday’s low to above yesterday’s high. Today would then be an outside up day on the daily chart, which would make higher prices likely tomorrow.
The Emini has been mostly sideways for 6 days. That increases the chance of more sideways trading today, both on the daily chart and on the 5-minute chart. But if the gap stays open and today sells off, traders will look for a test down to last week’s low by the end of the week.
EURUSD Forex market trading strategies
The EURUSD Forex market on the daily chart began a 2nd leg up 4 days ago after a strong rally 2 weeks ago. The bulls want a successful breakout above the September 1 high at the top of the 4-month trading range.
Everyone can see that there have been many strong legs up and down for 4 months. Several broke above or below the range, but each reversed. That is what typically happens when the market is in a trading range, and that is what traders will continue to expect until there are consecutive closes above or below the range. That breakout will eventually happen. And at that point, traders will look for a 400-pip measured move up or down.
There are now 4 consecutive bull bars with closes near the high of each bar. That typically leads to at least slightly higher prices. But, despite the strong 3-week rally, a reversal down from around the top of the range is more likely than a successful breakout above the range.
Traders are buying because there is no reversal yet and there is room to the top of the range. But will they keep buying if the EURUSD reaches the September 1 high? We will find out.
Overnight EURUSD Forex trading
The 5-minute chart of the EURUSD Forex market rallied from around yesterday’s close to above yesterday’s high. So far, today is a 4th consecutive bull trend day on the daily chart.
However, the overnight rally was small and brief. The EURUSD has been sideways for the past several hours. Traders are deciding if the EURUSD will successfully break above the September 16 lower high this week, or again reverse down, like it did last week.
With today’s small range, traders suspect that a breakout above, or a reversal down might have to wait for tomorrow. Also, with a 20-pip range over the past 4 hours, it is even difficult for scalpers to make any money. But with room to last week’s high and no 20-pip pullback in 6 hours, day traders are mostly buying, hoping for the rally to reach last week’s high.
The EURUSD is near a price where it has reversed down many times over the past 4 months. That increases the chance of either a breakout or a reversal this week. But there is room to last week’s high and the bears have not even been able to make a scalp overnight. Traders expect at least slightly higher prices today.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
The Emini reversed up from below yesterday’s low on the open. It rallied for a couple hours and then went sideways for several hours. Since it stalled around an measured move up from the low to the open, the open was important. That led to a test of the open late in the day. Today closed near the open, like most days for the past 3 weeks.
On the daily chart, today was a pullback from a 2-day rally. Today is a High 1 bull flag buy signal bar for tomorrow. If tomorrow goes above today’s high, it would trigger a buy signal. But with today not closing near its high, it is a weak buy signal bar.
The 2-week rally has been strong. The bulls want a breakout far above last week’s all-time high. If tomorrow continues up, the bulls will look for a close above last week’s all-time high at some point this week.
However, if the Emini tomorrow trades above today’s high but then reverses down within a couple days, there would be a micro wedge top. Furthermore, the wedge would be the 2nd leg up in a double top with last week’s high. That would increase the chance of at least a couple small legs down.
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 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.