Emini and Forex Trading Update:
Thursday October 1, 2020
I will update again at the end of the day.
Pre-Open market analysis
Today is the 1st day of October. The Emini in September formed an outside down month with a big bear body. That makes some sideways to down trading likely.
But September had a big tail below on the monthly chart and it followed 5 strong bull bars. Therefore, the best the bears can probably get is a pullback lasting a month or two. The bulls will buy the pullback, betting against a trend reversal down.
The bar after an outside bar is often an inside bar. If October is an inside bar, it will be both a buy and sell signal bar for November. October will open today in the middle of September’s range. It is therefore beginning as an inside bar.
I have been saying that the small wedge bull flag on the daily chart should have a couple legs up. In addition, the rally should reach around the start of the wedge. That was the September 16 high, just above 3400. Despite yesterday’s reversal down, the Emini should still get there.
Weak sell setup
Yesterday was a 2nd small leg up on the daily chart and it broke above the February high. The Emini the collapsed 50 points late in the day to a new low of the day after the cash index went just 4 cents above its February high.
Despite yesterday’s reversal to a new low, yesterday’s candlestick had a small bull body on the daily chart. Additionally, the Emini bulls probably want another test of the February high and 3400. Therefore, if the daily chart reverses down today, the bulls should buy a 1 – 3-day pullback for at least one more attempt to break about 3400.
If the bulls get a breakout far above the September 16 high, the rally will probably continue up to a new high. It is still more likely that the rally will form a double top with the September 16 lower high and then break below the low of 2 weeks ago.
For several weeks, I have been saying that the Emini should fall below the July/August streak of 9 consecutive bull bars. The low of the streak was July 30 low of 3184.75. If it does, the odds of a test of 3000 will increase.
Overnight Emini Globex trading
The Emini is up 29 points in the Globex session. The test of the cash index’s February high was so brief yesterday that many traders do not believe it was adequate. That increases the chance of another test today.
Also, the September 16 Emini lower high of 3419.50 is an important magnet above. These factors increase the chance of the Emini going at least a little higher within a few days.
Since those prices are important resistance, there is an increased chance of a sharp reversal down soon. Yesterday was an example. However, the odds favor an attempt to go at least a little higher today.
Every day this week had a lot of trading range trading, even though the legs up and down were often big. Day traders will expect at least one leg up and one leg down today. But because the Emini is testing resistance, they will be ready for a possible trend up or down.
EURUSD Forex market trading strategies
The EURUSD Forex market on the daily chart has rallied for 4 days after breaking below an 8-week trading range. If today closes far above the EMA or if today and tomorrow both close above the EMA and September 17 low, traders will conclude that the bear breakout failed. They would then think that the trading range is continuing or that the bull trend is resuming.
Because the September 2018 high is major resistance and this reversal up has not been strong, it probably is too early to bet on the April to August bull trend resuming. However, a couple closes above the EMA will make traders think the rally will test the September 21 sell climax high.
Will October be an inside bar?
The open of the week is so far below that the bulls should get a bull body on the weekly chart (not shown). If the week closes on its high, this week will be a buy signal bar on the weekly chart. But since the weekly chart is at major resistance, this would be a weak buy setup. It would make a continuation of the 2-month trading range more likely than a resumption of the bull trend.
September was an outside down bar on the monthly chart. The bar after an outside bar is often an inside bar. So far, October is above the September low and below the September high. It is therefore an inside bar. If it remains an inside bar all month, there will be an ioi (inside-outside-inside) pattern on the monthly chart. That is a Breakout Mode pattern. October would then be both a buy signal bar and a sell signal bar for November.
Overnight EURUSD Forex trading
The 5-minute chart of the EURUSD Forex market has been in a weak bull channel for 4 days. It is now testing resistance on the daily chart. There is a slightly increased chance of an acceleration up through that resistance today. But it is still more likely that the chart is working sideways to up. Day traders are therefore scalping in both directions. Because of the series of higher highs and lows, it is easier to make money buying pullbacks than selling rallies.
Today’s close is important. If the bulls can get the day to close near its high, the bulls will increase their chance of the rally continuing up next week to the September 21 high. But if the bears can get today to close on its low, today will be a sell signal bar for tomorrow.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
The cash index again reversed down from above its February high on the open. The Emini reversed down from above yesterday’s high. The Emini had a sell climax down to the EMA and a 50% retracement and then entered a trading range around the 50-day simple moving average. The bears got a test down to the 60-minute EMA, but the bulls bought it and the Emini returned to the earlier trading range.
Traders still expect a test of the 3400 Big Round Number and maybe the September 16 lower high. However, whether or not the Emini bulls get there, traders also know that the odds still favor a break below the September low before there is a new high. If the bulls get a strong break above that September lower high, the odds will shift in favor of a new high in October.
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.