Emini and Forex Trading Update:
Tuesday April 30, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini yesterday continued Friday’s weak rally until late. It then reversed down to close near the open and low. Yesterday became a bear trend reversal day on the daily chart. Consequently, it is a sell signal bar for today.
But, it was a bull doji bar and the daily chart is in a tight bull channel. This is therefore a minor sell setup. The best the bears will probably get is a 2 – 3 week, 2 – 3% pullback, like the other pullbacks in the past 4 months.
While the correction might begin today, today will likely be quiet ahead of tomorrow’s FOMC announcement. Most days over the past month have had at least one swing up and one swing down. There is no strong reason to expect otherwise today.
Traders are confident of a new all-time high. What they do not know is if it will come before tomorrow’s FOMC announcement, immediately afterwards, or a few weeks later.
It is important to note that today is the final day of the month. That increases the chance of a surprise move up or down, especially in the final hour.
Overnight Emini Globex trading
The Emini is down 1 point in the Globex session. If it opens here, it will be just above yesterday’s low. That would make a break below yesterday’s low likely. Because the Emini is in a buy climax and at a major prior high, there is an increased chance of a big move up or down today.
Even though trading below yesterday’s low would trigger a sell signal on the daily chart, the sell setup is weak. Consequently, there will probably be more buyers than sellers below yesterday’s low. This is especially true with tomorrow’s important catalyst. The Emini typically does not have a big move just ahead of a catalyst.
Since today is the last day of the month, there is an increased chance of a sharp move up or down in the final hour.
EURUSD Forex market trading strategies
The EURUSD daily Forex chart has reversed up for 3 days after breaking below a 5 month trading range. But, it has been in a bear channel for 10 months. There have been many new lows and some minor new highs. However, as long as the chart continues to make lower highs and lows, it is still in a bear trend.
The bulls need a break above a major lower high. They then need a higher low, and then another new high. In addition, they need a break far above that major lower high. The most recent major lower high is the March 20 high of 1.1448.
Even if the bulls accomplish all of this, that simply ends the bear trend. It does not necessarily begin a bull trend. More often, it converts the bear trend into a trading range. At that point, the bulls will need a major trend reversal buy setup and a successful break above the trading range before traders will conclude that a bull trend has begun.
Therefore, traders will assume that this rally is a bull leg in the bear channel. There have been many other similar rallies. Each has lasted 2 – 3 weeks. Consequently, traders will assume that this rally will fail within a couple weeks at around the April 12 lower high of 1.1324.
Tomorrow’s FOMC announcement is a possible catalyst for a surprisingly big move up or down. However, it will unlikely not be enough to break above the March 20 lower high.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart rallied 50 pips overnight after yesterday’s reversal up from below the 5 month trading range low. The rally is now testing the 20 day EMA. Because the pullbacks for the past 6 hours have been small, day traders could only make money by buying.
While the pullbacks have been small, the rally over the past 2 hours has had small bars will prominent tails. That is a sign of loss of momentum. It increases the chance of an evolution into a trading range.
If the rally begins to evolve into a trading range, day traders will start to sell for scalps in addition to buying. However, a tight bull channel typically does not convert into a bear trend without 1st entering a trading range for 20 or more bars. As a result, it will be easier to make money focusing on buy setups today until the bears can get at least one 30 pip reversal.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
By breaking below yesterday’s low, the Emini triggered a sell signal on the daily chart. Since it was a weak signal, there were likely to be more buyers than sellers below, and there were.
The Emini broke strongly below an early trading range, which became the Final Bear Flag on the 5 minute chart. The strong bear breakout was a bear trap and an exhaustive sell climax. The Emini reversed up to a new high, and the rally stop exactly at yesterday’s high. It was therefore almost an outside up day and it is now a buy signal bar for tomorrow.
Tomorrow is an FOMC announcement day. The Emini is in a buy climax on the daily chart at the all-time high. As a result, there is an increased chance of a big move up or down after the 11 am PST report tomorrow.
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 Intraday Market Update page.