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Emini pulling back into the end of October

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Trading Update: Thursday October 28, 2021

Emini pre-open market analysis

Emini daily chart

  • Yesterday triggered a minor sell signal by trading below Tuesday’s low. Since it came in a strong bull trend, the reversal down should be only a few days days.
  • Because yesterday closed on its low with the Emini pulling back, reversing down from above the 4-month trading range (September 2 high), today should trade below yesterday’s low.
  • The bears want a 3rd consecutive bear bar, which would increase the chance of at least a couple small legs sideways to down.
  • Yesterday was a pullback in a bull trend. It is therefore a High 1 buy signal bar. But it was a big bear bar and the 2nd consecutive bear bar in a buy climax at resistance (the September high). There will probably be sellers not far above yesterday’s high.
  • Yesterday’s selloff was a test of the open of the week, and yesterday closed 2 ticks below the open of the week.
  • The bears want a bear bar this week on the weekly chart to increase the chance that the breakout above the top of the 4-month trading range will fail. The open of the week could be a magnet for the final 2 days of the week.
  • They would also like October to close (Friday is the final trading day of the month) below the September high to reduce the chance of a big rally in November.
  • Most bars do not close on their highs. That increases the chance of a pullback going into the end of the month, which would create a visible tail on the top of October’s bar on the monthly chart.
  • After October formed an outside up month after September was an outside down month, the odds already favored at least slightly higher prices in November.
  • The bears would need several big bear bars on the daily chart before traders would conclude that the breakout above the September 2 high at the top of the 4-month trading range might fail.
  • Without that, traders will continue to expect higher prices.

Emini 5-minute chart and what to expect today

  • Emini is up 14 points in the overnight Globex session.
  • Since yesterday was a sell climax, there is a 75% chance of at least a couple legs sideways to up, starting by the end of the 2nd hour.
  • Because yesterday was a big bear day closing near its low and the 2nd consecutive bear day, today or tomorrow should test below yesterday’s low.
  • While the bears want a higher high double top with the September high, a minor reversal down is more likely. Consequently, the odds are against a big bear day today.
  • Yesterday was a test of the open of the week. It broke slightly below and then stopped. That hesitation increases the chance of another test of the open of the week today.
  • The next support below that is last month’s high. Remember, I have been saying for the past week that the month might sell off at the end of the month. Has it sold off enough? Maybe, but it might have to test the September high.
  • Can the Emini reverse back up to the high from these support levels by the time October closes tomorrow? It is unlikely to make a new high by tomorrow’s close after consecutive bear bars closing near their lows. That reduces the chance of a big bull day today.
  • Since yesterday collapsed down to support, there is an increase chance of some back filling. The Emini might enter a trading range today between the open of the week at 4544 and the 60-minute EMA above, around 4560.
  • Since those prices are only 16 points apart, if there is a trading range, its height should be bigger. That means the Emini should go beyond at least one of them today.

Yesterday’s Emini setups

Emini failed breakout of triangle and then double top and measured move down. Emini pulling back into end of October.

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. Buyers of both 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. These therefore are swing entries.

It is important to understand that most swing setups do not lead to swing trades. As soon as traders are disappointed, many exit. Those who exit prefer to get out with a small profit (scalp), but often have to exit with a small loss.

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

EURUSD Forex daily chart

EURUSD Forex pullback from minor reversal in bear trend
  • Yesterday was another small day, and it turned up from the bottom of a 10-day tight trading range.
  • It traded slightly below Tuesday’s low and then slightly above Tuesday’s high. It was therefore an outside up day. However, it closed below Tuesday’s high, which means it is not a strong buy signal bar for today.
  • Today dipped below yesterday’s low and went slightly above yesterday’s high. It is therefore a 2nd consecutive outside day (OO pattern). An OO is a breakout mode pattern, which increases the chance of buyers above and sellers below tomorrow.
  • There is now a 5-day pullback from the minor reversal up to October 19, which was a test of the August 19 breakout point.
  • The 5-day selloff has been weak. It looks more like a leg in a trading range than a resumption of the bear trend.
  • The bulls want a reversal up from a higher low major trend reversal. If tomorrow breaks strongly above today’s high, that would increase the chance of higher prices next week.
  • The bears want the reversal down from last week’s high to accelerate and break below the March 9, 2020 high, which was the breakout point for the 2020 summer rally. If tomorrow breaks below today’s low, that would increase the chance of a test of the October low or lower.
  • Traders are deciding if this selloff is a resumption of the trend or a pullback from what they hope is the start of a bull trend.
  • Because that is an important price and the EURUSD has been in a trading range for 7 years, the odds still slightly favor a dip below that high before there is a reversal up to test the September 3 high.
  • Traders should expect a rally lasting at least several weeks to start soon. They are deciding if it has already begun or if there will be one more leg down first.
  • Tight trading ranges resist change. Consequently, it is more likely that today will be another average day.
  • It should trade above yesterday’s high since yesterday formed a reasonable buy signal. However, the odds are against today being a big bull trend day because the EURUSD is in a tight range.
  • At some point soon, there will be either a breakout below the range and a test of the March 9, 2020 high, or a strong break above the October high and then a rally for several weeks.
  • However, until there is a breakout, it is more likely for the tight trading range to continue.

Summary of today’s S&P Emini futures price action and what to expect tomorrow

Emini bull trend from the open and then trend resumption up

End of day summary

  • Today had a big gap up and then a weak rally. It was sideways until the end of the day when is broke to a new high (late bull trend resumption).
  • The bears want a reversal down from a micro double top with Tuesday’s high.
  • However, since today was a bull bar, it is a weak sell signal bar, just like yesterday was a weak buy signal bar.
  • Tomorrow is the final day of the week and month. The bulls want the week to close above the open and at a new all-time high.
  • The bears want the month to close below the September high.
  • With an OO on the monthly chart in a strong bull trend, November should go above the October high.
  • Less likely, November will be an inside bar on the monthly chart after an OO. That would be an IOI (inside-outside-inside). It would not change anything because an IOI is also a breakout mode pattern.

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 Time

When I mention time, it is USA Pacific Time. The Emini day session charts begin at 6:30 am PT and end at 1:15 pm PT which is 15 minutes after the NYSE closes. You can read background information on the market reports on the Market Update page.

  • sir as you mention in the course sometimes the stop loss is hit and then the trend resumes in our favour in those case we are already in a loss of 1% of our capital. When re-entering should we risk another 1% or we should reduce our risk?

    • Traders have a better chance of making money if they make fewer decisions. It is generally better to do everything the same on every trade.

      If a trader is worried about losing money, then the trader should wait until that the worry is no longer there. There is nothing wrong with waiting until the feelings are back to normal.

      It is usually bad to trade if a trader is thinking about money. He then is not focused enough of managing the trade and more likely to lose.

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