Emini and Forex Trading Update:
Tuesday March 9, 2021
I will update again at the end of the day.
Pre-Open market analysis
With the Emini reversing every few days, traders expect the 2-month trading range to continue indefinitely. The Emini is also in the middle of a 3-week trading range. They have been buying selloffs and selling rallies, which has created the trading range. Trading ranges are generally neutral. This one is slightly more bearish because of last week’s 3 consecutive bear days. Therefore, the odds of a bear breakout and a measured move down are greater than for a bull breakout.
Yesterday broke above Friday’s high and triggered a High 1 bull flag buy signal. It was also a wedge bull flag buy signal. But it closed near its low, and it is now a Low 1 sell signal bar. It is also the 4th lower high in an early bear channel.
The bulls hope that yesterday is just a pullback from Monday’s strong reversal up. They might get a rally this week to the February 24 and March 1 lower highs. But they will need either consecutive big bull bars or a strong break above the February 24 lower high to flip the odds back in their favor. If the bears can get a reversal down from either of those highs, there would be a double top lower high major trend reversal on the daily chart.
Overnight Emini Globex trading
The Emini is up 38 points in the Globex session. Yesterday sold off in a Spike and Channel Bear Trend. The start of the channel was the bounce back up to the open of the month at 11:35 am PST. The Emini is currently back there in the Globex session.
The start of a bear channel is always a magnet once there is a reversal up. The market then typically enters a trading range. With the Emini also in the middle of a 3-week trading range and within a 3-month trading range, there is an increased chance of trading range trading on the 5-minute chart today. This is especially true with a reversal up from yesterday’s Spike and Channel Bear Trend.
Can today instead be a big trend day up or down? That is possible any day, but a trading day is more likely. The daily ranges have been big so there should be at least one swing up and one swing down today, but today will probably have a lot of sideways trading after all of the recent reversals.
EURUSD Forex market trading strategies
The EURUSD Forex market on the daily chart formed a 2nd consecutive big bear bar closing below the February 5 bottom of a 3-month trading range. This is now a confirmed breakout, which makes a measured move down to the November 4 low likely.
But that does not mean straight down. The selloff is a parabolic Spike and Channel sell climax, where February 26 is the spike, and the channel began on March 3. That typically attracts profit taking (short covering), which might have started overnight. It could last a couple weeks, and get back to the start of the bear channel around the March 3 high. At a minimum, there should be a bounce above the February 5 low within a week.
Why is the EURUSD pausing here? It is testing the September 2018 top of the 2018 bear channel
Can the breakout fail? Every breakout always has at least a 40% chance of failing. The bulls will need several strong bull days and probably at least a micro double bottom to have a chance of a trend reversal.
Right now, it is more likely that the short covering will last 1- to 3-days and then the selloff will continue down to the November 11 low. That was the start of the bull channel after the March 9 spike up. The EURUSD should reach the November 4 low within a couple months.
Overnight EURUSD Forex trading
The 5-minute chart of the EURUSD Forex market rallied strongly overnight but has pulled back 30 pips over the past 3 hours. That is enough for day traders to expect a trading range. They were only buying since yesterday’s close, but they now will be willing to sell rallies as well, betting on a trading range instead of a continuation of the strong short covering rally.
Can the EURUSD continue the reversal back down to the low of the session? After such a strong rally in an extreme sell climax on the daily chart, the selloff will probably not get much below 1.19. The EURUSD should be sideways to up for the remainder of the session.
The bulls want today to close near its high. That would increase the chance of higher prices tomorrow. If the week can close near its high, next week should be higher as well.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
The Emini rallied in a Bull Trend From The Open to just above the 3,900 Big Round Number. But it was mostly sideways for the 2nd half of the day and it kept failing to hold above 3,900. It sold off at the end of the day from a Lower High Major Trend Reversal and Head and Shoulders Top.
The bulls are trying to break above the February 24 lower high and then above 4,000. However, the bears have been forming lower highs. Despite this week’s rally, the odds still slightly favor a 10% correction before there is a new high.
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.