Emini and Forex Trading Update:
Tuesday March 2, 2021
I will update again at the end of the day.
Pre-Open market analysis
Friday was a 2nd consecutive big bear day on the daily chart. That has not happened since the 10% corrections in September and October. It made a 10% correction likely.
However, yesterday was a big bull day, and the Emini is now back to neutral. If the bulls get a strong follow-through day today, traders will expect a break above 4,000 in March. But if today is a big bear day, traders will see yesterday as a pullback from last week’s bear days. They would then again think that a 10% correction is underway.
Which is more likely? Neither. The Emini has been in a trading range oscillating around 3,900 for a month. That means lots of reversals, which increases the chance of disappointing follow-through for the bulls today.
Also, yesterday was a buy climax day on the 5-minute chart. The day after a buy climax has a 75% chance of a couple hours of sideways to down trading beginning by the end of the 2nd hour.
Overnight Emini Globex trading
The Emini is down 6 points in the Globex session. That increases the chance that it will continue yesterday’s trading range, which began after the early rally.
Since 3,900 has been such an important magnet for a month and the Emini is very close, the Emini will probably test it again today. But with the daily chart in a trading range for a month, today will probably not be a 2nd consecutive big bull day.
Since yesterday was a Bull Surprise, there should be a least a little more sideways to up trading today or tomorrow. That makes a big bear day unlikely. Therefore, today will probably be either a trading range day or a weak trend day in either direction. Also, with today opening within yesterday’s trading range, there is an increased chance of a trading range open.
EURUSD Forex market trading strategies
The EURUSD Forex market on the daily chart is again testing the January 1 sell climax low. With the overnight reversal up from below support, the odds are against a close far below the January 1 low today.
The bears got a big bear bar in early February that closed below the January 5 low, but they need consecutive closes below support to convince traders that the bear breakout will succeed. They are trying to get another close below today, but they now need closes below the new low of the trading range, which is the February 5 low.
After 4 strong days down, the bulls will probably need a micro double bottom before they can get a leg up. With the EURUSD looking like it will not close below the January low and with the bulls needing a micro double bottom, there is an increased chance that today will be sideways.
Overnight EURUSD Forex trading
The 5-minute chart of the EURUSD Forex market sold off again below the January 1 low and again reversed up. It did not fall below the February 5 low, which is the new low of the 3-month trading range.
The overnight reversal up so far has only been 40 pips, and the EURUSD has been sideways for 3 hours. The minimum goal for the bulls is to have today close above or around the February 17 low. If the EURUSD simply continues sideways here, they will have achieved their goal. That would increase the chance that it will reverse up again from the bottom of the range.
Can today collapse down to the February 5 low or rally strongly today? Probably not. The range and the legs have been small. Day traders have only been scalping. With the EURUSD oversold, if there is going to be a big trend today, up is more likely. However, a continuation of the trading range day is most likely.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
The Emini sold off from 3,900 for a couple hours on the open and then reversed up from a wedge bottom at the 60 minute EMA. It tried a couple more times to get above 3,900 and failed. It again sold off to the 60 minute EMA at the end of the day, but could not break far below below.
The Emini closed near the low of the day, and there was no follow-through buying after yesterday’s reversal up. That shifts the odds a little in favor of the bears.
The Emini has been stuck at 3,900 for a month, and it has been reversing every few days. Traders are deciding if the bull trend will resume to above 4,000 or correct down 10%.
With today being an inside day closing on its low, it is a sell signal bar for tomorrow on the daily chart. If the bears create another big bear day again tomorrow, the odds of a 10% correction in March will be back at 60%.
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.