Emini and Forex Trading Update:
Friday March 12, 2021
I will update again at the end of the day.
Pre-Open market analysis
The Emini broke to a new all-time high yesterday, but failed to close at a new high. The break above the February 24 lower high erased the bearishness of last week’s 3 consecutive bear bars. The bears gave up, at least for the moment.
When one side gives up, there is usually at least a small 2nd leg up. Consequently, traders will likely buy the 1st 1- to 3-day pullback. Therefore, there is not much downside risk over the next few days.
The bears want the breakout to fail. With yesterday’s tail on top, and with the 6-day micro channel, there is an increased chance that today will trade below yesterday’s low. A reversal down would be from a higher high double top. But since traders will buy the 1st reversal down, the bears will need at least a micro double top before they can get more than a minor reversal.
The next target above is the 4,000 Big Round Number. Will the Emini break above it? I have been saying for months that it should, but the odds favored a pullback first. Now, the odds favor at least a test of 4,000 within about a week.
Overnight Emini Globex trading
The Emini is down over 10 points in the Globex session. While yesterday broke to a new high, the size of midday reversal down was disappointing for the bulls. Big Up, Big Down creates Big Confusion. When traders are uncertain, they tend to buy low, sell high, and take quick profits. There is therefore an increased chance of a trading range day today.
Also, with yesterday’s weak close and a 6-day bull micro channel on the daily chart, the bears will try to get today to break below yesterday’s low. That would trigger a double top (with the February 16 high) sell signal. However, there probably will be more buyers than sellers below yesterday’s low.
With today being Friday, weekly support and resistance can be important, especially in the last hour. The most important magnets below are the February 24 high and the last week’s high. Also, the 3,900 Big round Number is a magnet. For the bulls, they want the week to close above the February 16 high and the 3,950 Big Round Number.
EURUSD Forex market trading strategies
The EURUSD Forex market on the daily chart rallied 3 days after a strong breakout below the February 5 low. Yesterday is a Low1 sell signal bar, and the November 4 low is a magnet below.
However, the selloff was extreme and therefore climactic. Also, there have been 3 legs down from the January high, and therefore the bear channel is a wedge. The 3-day reversal up was strong enough for traders to expect at least a small 2nd leg up. Also, yesterday was a bull bar closing near its high, and therefore a weak sell signal bar for today. Consequently, while yesterday is a sell signal bar in a bear trend, there probably are more buyers than sellers below its low.
Today is Friday and weekly support and resistance can be important. The EURUSD is now trading just above the open of the week, so the weekly candlestick is a bull doji, which is slightly bullish. The bulls want the week to close on its high. This week would then be a good buy signal bar on the weekly chart. That would increase the chance of higher prices next week. But the bears want lower prices. Their odds will go up if this week has a bear body and closes below the midpoint.
Overnight EURUSD Forex trading
The 5-minute chart of the EURUSD Forex market sold off overnight from yesterday’s close. It traded below yesterday’s low and completely reversed yesterday’s rally. The bears want today to close near its low. Today would then be the 2nd bar of a 2-bar reversal on the daily chart. Traders would see today as a better sell signal bar for Monday. Also, if the week closes below its midpoint, fewer traders would be willing to buy above this week’s high.
The bulls want the week to close above the open. After the overnight strong selloff, today will probably not close at the high of the week, so this week will likely not be a strong buy signal bar on the weekly chart. The best the bulls probably can get is a close above the open of the week. The reversal up over the past 3 hours was big enough, so that the bulls have at least a 50% chance of achieving their goal.
Day traders only sold early in the session, but they bought below yesterday’s low, and the EURUSD has rallied 30 pips over the past 3 hours. That is enough so that bulls will buy pullbacks. Since a reversal up to yesterday’s high is unlikely, today will probably be sideways. Day traders will look to scalp in both directions. The fight will be over the close of the week. The bulls will try to get the week to close above the open and the bears want a bear close on the weekly chart. This week will probably close near the open, with either a small bull or bear body on the weekly chart.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
The Emini traded below yesterday’s low, which was likely after yesterday’s late selloff and a 6-day bull micro channel. But as was also likely, there were more buyers than sellers below yesterday’s low.
Today was a weak bull channel, but mostly had trading range price action. Since it had a bull body, it is a High 1 bull flag buy signal bar on the daily chart. Monday will probably trade above today’s high. The bulls want to break above the 3,950 and 4,000 Big Round Numbers next week. That is more likely than Monday forming a micro double top and then Tuesday reversing down strongly.
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.