Emini and Forex Trading Update:
Thursday February 11, 2021
I will update again at the end of the day.
Pre-Open market analysis
The Emini sold off yesterday from above Tuesday’s high to below its low. Yesterday was therefore an outside down bar on the daily chart. It is a sell signal bar for today. But it closed near the middle of the range instead of on the low. This is a weak sell signal bar. The Emini is more likely to go sideways today instead of down.
The day after a big day that closes in the middle of its range tends to mostly overlap the prior day’s range. Also, there is an increased chance of an inside day. Traders will look for a reversal up from around yesterday’s low, and for a reversal down from around yesterday’s high.
The bears want a reversal down on the daily chart from the top of a 4-month bull channel. Also, the Emini is just above the measured move target from the September/October double bottom.
However, yesterday was the 1st pullback after an 8-day bull micro channel. That means the bulls have been aggressive. The bears typically need at least a micro double top before they can get more than a 3-day pullback in a strong bull trend.
Also, traders want to see at least a couple consecutive big bear bars on the daily chart, before concluding that a 10% correction has begun. Without that, traders will continue to buy every 1- to 3-day reversal down.
Yesterday tested the open of the week. Tomorrow is Friday, and the open of the week might be a magnet, especially in the final hour. This increases the chance of the Emini going sideways into the end of the week.
The bulls want the week to have a bull bar on the weekly chart after last week’s big bull bar. That would increase the chance of higher prices next week.
But the bears want the week to close below the open, and preferably on the low of the week. This week would then be a sell signal bar on the weekly chart. It would increase the chance of lower prices next week.
It is important to note that the buy climax has gone on for several months on the daily chart. That is a long time. With the Emini now at the top of the bull channel, there is an increased chance of a 5 – 10% pullback coming at any time.
Overnight Emini Globex trading
The Emini is up 13 points in the Globex session. It will gap above yesterday’s close on the 5-minute chart, but probably not above yesterday’s high. Remember, since yesterday had a big range, and it closed in the middle, there is an increased chance of sellers today around yesterday’s high, and buyers near yesterday’s low.
Can today be a big bull day? Of, course it can. The Emini has rallied strongly for 8 days and several of the days closed near their highs. However, the rally covered a lot of points with only small pullbacks. That increases the chance of the bulls beginning to take some profits, which reduces the chance of a big bull day.
What about a big bear day? Yesterday rallied in a bull channel. Traders should think of a bull channel as a bear flag since the breakout is usually below. So, yes, the bears can get trend resumption down from yesterday’s early selloff. But as I said, the day after a big day tends to mostly overlap that day. That increases the chance of trading range trading today and it reduces the chance of a strong trend up or down.
Also, this week’s range is small. It might stay small and close near the open tomorrow. That further reduces the chance of a big trend today.
EURUSD Forex market trading strategies
The EURUSD Forex market on the daily chart has been rallying for 5 days from a failed breakout below a 2-month trading range. Traders expect at least a couple legs up to the January 22 high. Therefore, the bulls will buy the 1st 1- to 3-day pullback.
Today is a 3rd big bull body in the rally. That means it is the 3rd push up, and there must be a parabolic wedge on a lower time frame, like the 60-minute chart. That increases the chance of a pullback coming soon. For example, if today reverses down to the low of the session by the end of the day, there would be a micro double top on the daily chart. That would probably lead to at least a small pullback starting tomorrow.
Tomorrow is Friday and therefore traders will pay attention to the weekly chart today and tomorrow. Last week was a big bear bar. This week has totally reversed last week’s selloff. The bulls want the week to close on its high, and above last week’s high. That would increases the chances of at least slightly higher prices next week.
Overnight EURUSD Forex trading
The 5-minute chart of the EURUSD Forex market has rallied since opening near yesterday’s close. While it spent several hours going sideways overnight, it broke to the upside over the past hour to above yesterday’s high. The bulls would like today to close above yesterday’s high. That would increase the chance of at least slightly higher prices tomorrow.
Remember, the daily chart is overbought. Traders expect a pullback soon. There is therefore an increased risk of a reversal down later in the day today. But since the EURUSD is in the midst of a bull breakout on the 5 minute chart, day traders are currently only buying.
But if the EURUSD begins to go sideways again, the bears will start to sell. They will initially only scalp. However, if they can stop the bulls and create a trading range for a couple hours, they will have a 40% chance of a reversal down late in the day.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
Today began with a trading range and then it broke strongly down to below the open of the week. It then formed a lower trading range. Today was a Bear Trending Trading Range day. It also reversed up from a wedge bottom in the middle of the day, but the day closed below the open. It was a bear doji inside bar on the daily chart.
As I said was likely, today overlapped yesterday. It was also an inside day after yesterday being an outside day. An inside day after an outside day is an ioi Breakout Mode pattern. Today is both a buy and sell signal bar for tomorrow.
But yesterday and today spent a lot of time around the open of the week, which means it is an important price. With tomorrow being Friday and with this week being small, there is an increased chance of the Emini getting pulled to the open of the week in the final hour tomorrow. This reduces the chance that tomorrow will be a strong trend day up or 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.