Emini and Forex Trading Update:
Thursday November 7, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini sold off early yesterday on China trade news, but the strong bull trends on the daily and weekly charts were more important. The day reversed up and it is a buy signal bar for today on the daily chart.
Traders expect a test of 3100. However, the rally is climactic. Therefore there will probably be a 1 – 2 week pullback soon. It might be underway already, but the Emini will more likely test 3100 first.
Since a gap up on the monthly chart is rare, the pullback will probably fall below the October high and close the gap. However, the bull trend is strong. Traders should expect higher prices after the Emini closes the gap.
Overnight Emini Globex trading
I said yesterday that yesterday would have a bull body on the daily chart and become a High 1 buy signal bar for today. I also said that there would probably be a test of 3100 before there is a 2 week pullback. The Emini is up 12 points in the Globex session. It will therefore probably gap above yesterday’s high. That will trigger the buy signal on the daily chart.
A big gap up increases the chance of a trend day. If there is a trend, up is more likely than down.
With so much trading range price action over the past few weeks, today will probably not form a strong trend. Traders should expect a lot of sideways trading even if today is a trend day.
However, the daily chart is in a buy climax and 3100 is a psychological barrier. Consequently, traders should expect a test down to the October high to begin within a week. The rally might go 20 points above 3000 before the pullback begins. But the probability is now shifting in favor of some profit taking after 4 strong weeks up.
A reasonable target would be a test of the October high of 3049. If there is a pullback, it will probably fall below that high and close the gap on the monthly chart. Traders will buy the pullback.
The yearlong rally and the rally of the past month make higher prices likely for at least the remainder of the year.
EURUSD Forex market trading strategies
The EURUSD daily Forex chart broke below the neck line of a double top 2 days ago. But there has been no follow-through selling. This is consistent with the chart being in a 2 month trading range. Traders should expect disappointing follow-through and reversals instead of the start of a strong trend up or down.
Because the chart is in a trading range, the week-long selloff will probably have to test down more toward the middle of the range. A reasonable target is the October 15 low, which is around a 50% pullback from the October rally.
Since that rally was the strongest one on the daily chart in almost 2 years, traders should expect a 2nd leg up. Consequently, bulls will soon look to buy either around the current level or the October 15 low.
A trading range is a breakout mode pattern. There is always both a buy and sell setup. The bears see these 2 months as a big bear flag. They expect a bear breakout at some point. The lack of follow-through selling over the past 2 days is a sign that the current selloff is more likely just a bear leg in the range and not a resumption of the 22 month bear trend.
Overnight EURUSD Forex trading
Yesterday was a small trading range day. It was a Low 1 sell signal bar on the daily chart. Today traded below yesterday’s low and therefore triggered the sell signal.
Yet, the EURUSD soon reversed up. There were more buyers than sellers below yesterday’s low and below last week’s low. Today is therefore forming a micro double bottom with Tuesday’s low.
The bulls want today to close near its high. It would then be a buy signal bar on the daily chart. They would see a High 2 bull flag with the October 25 low. In addition, this would be a higher low major trend reversal.
While they might get a resumption of the October rally from here, the 2 day selloff was surprisingly strong. Consequently, there is confusion. That typically results in more sideways trading. Traders should expect a 50 pip trading range that will last today and tomorrow. Day traders will scalp for 10 – 20 pips unless there is a strong breakout up or down on the 5 minute chart.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
After a big gap up, the Emini entered a tight trading range. There was a late bear breakout and today closed near its low.
Today is a sell signal bar for tomorrow. There are consecutive parabolic wedge tops in the 5 week rally. Also, the Emini is testing the 3100 Big Round Number. Consequently, there will probably be a pullback to between 3000 and 3050 that begins within a week or so.
Will today be the top? It might be, but many bulls will wait to take profits until after the Emini breaks above 3100 or until the Emini begins to accelerate down.
The upside over the next week is small. But, even if the bears get their 2 week pullback, the bulls will buy it, expecting another new high before the end of the year.
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.