Emini and Forex Trading Update:
Thursday October 17, 2019
I will update again at the end of the day.
Pre-Open market analysis
Yesterday was a trading range day and a small inside day. The bulls see it as a High 1 bull flag buy signal bar. But the 3 week rally has had 3 pushes up. Consequently, yesterday is also a sell signal bar for a wedge rally.
With the Emini in a trading range for 4 months, neither signal will likely lead to a trend on the daily chart. Also, 6 of the past 7 days have had at least one reversal. Day traders will assume that today will be like those days and bet that any 2 – 3 hour trend will reverse.
The 3 week rally on the 60 minute chart has not been particularly strong. Yet, the Emini has not touched its 20 bar EMA in 30 bars. That is unusual. The Emini will probably pull back to the 60 minute EMA today or tomorrow. When the price action is not far above average, the price typically has to get back to average, at least briefly.
Overnight Emini Globex trading
The Emini is up 9 points in the Globex session. It might therefore gap above yesterday’s high. The bulls want trend resumption up after Tuesday’s rally.
But 3,000 has been resistance for 6 months. Whenever it has been there, it has gone sideways. Also, most days over the past week have had trading range price action. Finally, today is the 3rd leg up in the past 5 days. There is therefore a small wedge rally, which usually attracts profit-takers. Consequently, today will probably not be a big trend day up or down. However, if there is a trend, up is more likely than down.
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.
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.
EURUSD Forex market trading strategies
The EURUSD daily Forex chart broke above the September 13 minor lower high overnight. It will likely test the August 6 lower high within a few weeks. The rally might continue up to the June 25 major lower high within a couple months.
Since the rally has 3 legs up and is testing resistance, traders expect a 2 week pullback to begin within a couple weeks. The bull channel is tight and therefore the 1st reversal down will probably form a higher low. Traders expect a 2nd leg up.
The bulls hope that the October rally is the end of the 2 year bear trend. That bear channel has gone on for a long time. Most bear channels end with a bull breakout.
However, there have been many rallies over the past 2 years. Each reversed down and led to a new low. Also, there is a gap and there are 2 measured move targets about 80 pips below the October low. Unless this rally gets a couple closes above the June 25 high, the odds are that this rally will fail before the end of the year and test that support. Traders will change their minds if the bulls get 2 closes above the June high.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart rallied in a parabolic wedge buy climax overnight to above the September 13 minor lower high. The rally is a buy vacuum test of resistance, which typically attracts profit takers. The 5 minute chart has been in a trading range for 4 hours around that September 13 high.
The bulls want the day to close on its high and far above that high. Traders would then expect higher prices tomorrow and next week. But after 3 legs up on the daily chart and a buy climax at resistance, the rally will probably stall for a few days. That means trading range price action.
Can the overnight bull trend resume? It might, but the 2 day rally has been extreme. The bulls will probably wait for more sideways bars before buying again.
What about a failed breakout above resistance and a reversal down from the 3 week wedge rally? Strong rallies usually have to go sideways for a few days before they can reverse. Therefore the probability of a bear trend reversal today is small.
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.
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.
End of day summary
The Emini gapped above yesterday’s high and 3000, but reversed down on the open. After a nested wedge bottom, it reversed up midday. It closed in the middle and was another trading range day.
There is now a 5 day wedge top on the daily chart. However, this week triggered a buy signal on the weekly chart. Conflicting signals typically result in sideways price action. Also, the Emini went sideways in July and September at this level. Consequently, it will probably be mostly sideways again 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.
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.
