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<\/a><\/p>\nHere are several reasonable stop entry setups from yesterday. I sometimes also show limit order entries and entries on the close of bars.<\/p>\n
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EURUSD Forex market trading strategies<\/h2>\n
The EURUSD chart rallied for 4 days from a higher low in a bull channel. Yet, there is a wedge and a head and shoulders top. The bears want at least a 2nd leg down.<\/p>\n The breakout would then be a failed breakout above a wedge top. The odds would still favor at least two legs and 10 bars down. Hence, this 7 week wedge bull channel is probably the early stare of a trading range.<\/p>\n While sometimes there is a strong breakout before the report, that is unusual. A small trading range is much more likely. However, because the report is unusually important, it will probably lead to a big move up or down. This is especially true since the daily and weekly charts are climactic and at resistance. <\/p>\n When a market is in breakout mode like this, there is a 50% chance that the breakout will be up and a 50% chance it will be down. In addition, there is a 50% chance that the initial breakout will fail. Therefore, after the report, most traders should wait at least 10 minutes before trading. The Emini formed an outside down day after the FOMC announcement. Yet, the bulls reversed the selling after a parabolic wedge bottom. The rally went back above yesterday’s high. The day was therefore both an outside down day and an outside up day. <\/p>\n After about 10 days of a tight trading range, the bulls try to break above what they see as a bull flag. If successful, the breakout usually reverses back down after 5 – 10 bars (days).<\/p>\n The bears try to get a bear break below the 10 bar bull flag. If they get it, that is usually the start of a swing down. See the weekly update<\/a> for a discussion of the price action on the weekly candlestick chart and for what to expect going into next week.<\/p>\n Traders can see the end of the day bar-by-bar price action report by signing up<\/a> 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<\/a>. We offer a 2 day free trial<\/a>.<\/p>\n
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\nThe EURUSD daily chart has 4 consecutive bull bars after last week’s higher low. While this reduces the chances for a 2nd leg down from the wedge top, the odds still favor that 2nd leg down. Also, since the bears have been making money by selling above prior highs for 7 weeks, they will probably sell above the September 8 high. Therefore, if the bulls get above that high, there is a 60% chance that the breakout will fail. Hence, the bulls only have a 40% chance of a measured move up without a swing down to the bottom of the developing trading range first.<\/p>\nOvernight EURUSD Forex trading<\/h3>\n
\nSince the rally on the daily chart is above the midpoint of last week’s selloff, it is at resistance. In addition, today’s 11 a.m. FOMC announcement is unusually important. Therefore, today will probably trade in a small range before the report. The 5 minute chart has been in a 25 pip range overnight.<\/p>\n
\n<\/p>\nSummary of today’s S&P Emini futures price action and what to expect tomorrow<\/h2>\n
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\nThe Emini sold off on the FOMC announcement. However, it reversed up strongly and closed back around yesterday’s high. The daily chart has a parabolic wedge rally. Today’s high formed a micro double top with Monday’s high. However, reversals after parabolic wedge tops usually begin with a tight trading range that is sloped slightly down. This is therefore what is most likely over the next week. <\/p>\n
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