Emini and Forex Trading Update:
Thursday April 1, 2021
Pre-Open market analysis of daily chart
- Yesterday was the 5th consecutive bull day and it formed another new high. Emini bulls want follow-through. This is unusual and therefore extreme. Increased chance of close below today’s open.
- Yesterday reversed down from just below the 4,000 Big Round number.
- Because it closed below the midpoint, the day was slightly more bearish than bullish.
- I have been saying for over a week that April might gap up to a new all-time high on the monthly chart. Since March closed 20 points below its high, there was a reduced chance of a gap up today. However, the Emini is back at the yesterday’s high in the Globex session, and therefore April might gap up in the day session on the monthly chart.
- If there is a gap up, the gap on the monthly chart will be small.
- Small gaps typically close before the bar closes. That means the gap will likely close by the end of April. If not, then probably within a few bars (months).
- January and February had tails on top of the bars on the monthly chart. With March closing near its high, there is a slightly increased chance of a reversal down in April for a 2-month reversal, instead of the 1 bar reversals of January and February.
Overnight Emini Globex trading on 5-minute chart
- Emini is up 20 points in Globex session, which is within a point of yesterday’s high.
- Bulls want gap up on monthly chart.
- If no gap up, bulls want to break above last month’s high (yesterday’s high).
- Market often goes above strong bull bar on higher time frame (here, monthly chart) and then reverses down strongly. Also, 4,000 is important psychological resistance and bulls might fail to break far above it. Increased chance of bear trend day.
- Bulls want strong breakout above 4,000 Big Round Number. That could lead to either big bull trend or bear trend day.
- Most days have at least one swing up and one swing down, and therefore that is likely today. However, increased chance of trend day in either direction.
Yesterday’s Emini setups
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- Bear trend since January 6, and strong bear trend since February 25.
- Bear trend is getting too strong. Stop for bears is far above and many will reduce risk by reducing size of their positions (covering some shorts).
- 2 small bull bars in sell climax indicates some profit taking (short covering).
- All bull trend reversals begin with short covering.
- Nested wedge is sell climax so bears might take some profits soon.
- If bulls believe short covering is underway, they will buy as well.
- Rally could last about 2 weeks.
- 1st reversal up in strong bear trend is typically minor, but it usually will have about 10 bars and have at least 2 legs (TBTL).
- Traders need to see several bull bars closing near their highs before believing this is start of 2-week rally.
Overnight EURUSD Forex trading on 5-minute chart
- Sold off early in overnight session, but reversed up from above yesterday’s low.
- Broad bull channel so day traders are both buying and selling.
- Since possible rally for a couple weeks, day traders will be more willing to swing long trades, betting on some bull trend days.
- Still in bear trend on daily chart so bears still looking for strong sell setups for a swing down. But, they know they might get overwhelmed if the short covering is strong and persistent.
- The stronger the short covering is, the more day traders will focus on buying. If there are rallies, bears will wait to sell until there is at least a 20-pip selloff.
- So far today, day traders have been buying and selling. They have been mostly scalping for the past few hours.
- Increased chance of strong bull trend days over the next several days.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
- Weak Bull Trend From The Open. The rally had lots of sideways trading and many bars with prominent tails. That made it unlikely for the trend to last all day. Mostly sideways for 4 hours.
- Bulls got strong Trend Resumption Up into the close.
- Breakout above 4,000 Big Round Number.
- Emini went sideways for several days to a couple weeks around all prior Big Round Numbers since 3500. Probably will go sideways here as well over the next week or so.
- Since the breakout above 4,000 is such an unusual event and the Emini is overbought, there is an increased chance of a reversal down.
- Until there are consecutive big bear days, traders will continue to expect higher prices.
- Gapped above yesterday’s high, which was last month’s high. Therefore, there is a gap on the monthly chart.
- Monthly gaps are small, and small gaps usually close before the bar closes. That means before the end of April.
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 Time
When I mention time, it is USA Pacific Time (the Emini day session opens at 6:30 am PT, and closes at 1:15 pm PT). You can read background information on the intraday market reports on the Market Update page.