Emini and Forex Trading Update:
Friday April 17, 2020
I will update again at the end of the day.
Pre-Open market analysis
Yesterday triggered a High 1 buy signal on the daily chart by trading above Wednesday’s high. It closed near the high, which increased the chance of higher prices today. Today will probably gap up big because it is up 73 points in the Globex session. Also, the daily chart is still in a Small Pullback Bull Trend.
Since the rally has had 3 legs up on the daily chart, it is a wedge. However, there has been no clear top nor a strong reversal down. Consequently, the odds continue to favor at least slightly higher prices. It will probably open today around the next targets, which are the 50 day moving average and the March 10 lower high.
As strong as the rally has been, it is still probably a leg in a trading range. Traders expect at least a 2 week test down at some point in May. Since the rally has been very strong, traders will buy the pullback.
Today is Friday and therefore weekly support and resistance can be important. This is particularly true in the final hour.
With today likely to gap up, the weekly targets are the 20 week EMA and the high of the week. On the downside, if today sells off, the open of the week and the 50% pullback of the 2 month bear trend are potential magnets below.
Overnight Emini Globex trading
The Emini is up 73 points in the Globex session. It will therefore gap up.
When there is a big gap up, the Emini is far above the average price on the 5 minute chart (the 20 bar EMA). Traders do not want to pay a price that is far above average unless the early bars are very strong.
When there is a big gap up, there is only a 20% chance of a strong trend up or down on the open. More often, the Emini goes sideways for an hour or two until it gets closer to the EMA. The bulls will then look to buy a reversal up from around the EMA. They want to see either a wedge bottom or a double bottom.
Trading ranges also have sell setups. The bears will look for a wedge rally or a double top if there is an opening trading range.
If there is a trading range open, which is likely, that means there is trading range price action. That reduces the chance that the day will become a strong trend day. Therefore, once a trend begins, traders will expect it to evolve into a trading range or have a reversal later in the day.
If there is going to be a trend, up is slightly more likely than down because the big gap is up.
Yesterday’s setups
Here are several reasonable stop entry setups from yesterday. I show each buy entry with a green rectangle and each sell entry with a red rectangle. I rarely also show limit order entries and entries on the close of bars. Buyers of the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).
My goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not currently in the market, these entries would be logical times for him to enter.
If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.
EURUSD Forex market trading strategies
The EURUSD Forex market on the daily chart is breaking below a triangle. Yesterday’s breakout was small and today so far has a bull body. This is a weak breakout. Remember, a triangle is a Breakout Mode pattern. There is a 50% chance that the 1st breakout up or down will fail. This looks like a failed bear breakout.
But the reversal up is weak as well. That increases the chance that the triangle will evolve into a simple trading range. The EURUSD will still be in Breakout Mode.
Traders want to see either a strong rally to above the March 27 high or a strong selloff to below the March 23 low before they conclude that a trend might be underway.
Even then, most breakout attempts fail. I have been saying this for 2 years. There have been countless strong rallies and selloffs. Every time there was an attempt at beginning a trend, I said that a reversal was more likely.
Markets have inertia. They have a strong tendency to continue to do what they have been doing.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market sold off to below yesterday’s low and then reversed up. The 60 pip rally has been strong. Day traders have only been buying.
However, the EURUSD is now near the top of yesterday’s trading range. Also, while the rally has been relentless for 4 hours, the bars have been small. That increases the chance that the EURUSD will begin to go sideways. But unless there is at least a 20 pip selloff, day traders will continue to only buy.
Can the EURUSD reverse back down again today? That is unlikely after a reasonably strong reversal up from a bear breakout on the daily chart. The best the bears will probably get is a 30 pip pullback today. Today will probably continue up or enter a trading range.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Here are several reasonable stop entry setups for today. I show each buy entry with a green rectangle and each sell entry with a red rectangle. I rarely also show limit order entries and entries on the close of bars. Buyers of the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).
My goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not currently in the market, these entries would be logical times for him to enter.
If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.
End of day summary
The Emini gapped up to the March 10 lower high and the 50 day moving average, but sold off on the open. It was in a trading range for most of the day. There was a strong reversal up into the close and today closed near the high. This increases the chance of higher prices for next week.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
Trading Room
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.
