Emini and Forex Trading Update:
Wednesday November 6, 2019
I will update again at the end of the day.
Pre-Open market analysis
I said on Monday that Tuesday was likely to trade below Monday’s low, and it did. This is because there has been a pullback every few days in the 5 week rally. With Monday being the 3rd day up and having a bear body, it was a good candidate to begin a pullback.
Will Tuesday be a 1 day pullback? The 2 most recent pullbacks lasted 2 days. Also, yesterday closed near its low. Therefore, today will probably trade below yesterday’s low and be the 2nd day in the pullback. If today has a bear body, there would then be 3 consecutive bear days on the daily chart. The bears will then begin to sell above the bear bars, betting that the Small Pullback Bull Trend might be evolving into a tight trading range.
Since yesterday was a pullback, it is a buy signal bar for today. But it had a bear body and it was the 2nd consecutive bear day. That is a weak buy setup. There will probably be sellers above and around 3100.
Many bulls want the rally to reach the 3100 Big Round Number before they take some profits. Since the rally is climactic and there will be profit-taking around 3100, the rally will likely begin to have more sideways trading this week.
After 4 consecutive bull bars on the weekly chart, the downside over the next couple weeks is small. But 4 weeks is a lot. There probably will be a 1 – 2 week pullback at some point in November.
Overnight Emini Globex trading
The Emini is up 4 points in the Globex session. It will therefore probably open in the middle of yesterday’s range.
The Emini has had 2 trading range days. While today might be a 3rd, the 2 days are probably forming a bull flag. Also, the Emini will probably test 3100 before there is a test down to below the October high.
But 2 sideways days late in a bull trend usually becomes the Final Bull Flag. There will probably be a deeper 1 – 2 week pullback at some point in November.
Remember, gaps are rare on the monthly chart. Traders should expect an attempt to close this month’s gap up this month. Therefore, if the Emini tests 3100 within the next week, there will then probably be at least a 50 point selloff within a couple weeks.
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 below the neckline of a double top yesterday. The bears want a measured move down and then a break below the October low. This reversal down would then be a resumption of the 22 month bear trend.
However, the October rally was the strongest rally in almost 2 years on the daily chart. Traders will therefore buy around a 50% pullback. Also, there is a cluster of resistance above the double top at around 1.12. Those magnets will probably draw the EURUSD up within a couple months.
Finally, if today is a bull day on the daily chart, it would be a buy signal bar for tomorrow. There would be a High 2 buy signal because of a reversal up from the 2nd leg down from the October 21 high. Traders would wonder if the 2 day selloff was a bear trap and if the month-long rally will resume this week.
The 2 bear days are big enough so that at least a small 2nd leg sideways to down is likely. However, traders should expect a move up to 1.12 within a couple months.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart reversed up overnight from below the October 25 neckline of the double top on the daily chart. Because the rally has been only 25 pips and it followed 2 big bear days, today will probably not be a big bull day. But is is enough to make a big bear day unlikely.
The bulls want a bull body and a close above the October 25 low. They will buy 10 – 20 pip selloffs today. They do not need the day to become any bigger. If is simply closes near its high, it would be a credible buy signal bar for tomorrow.
The bears want follow-through selling after yesterday’s breakout. That would increase the chance of lower prices over the next couple weeks. They want today to close near its low. Furthermore, they want today to break below yesterday’s low and close below yesterday’s low.
With the number of bull bars closing near their highs on the 5 minute chart overnight, the bears will probably not be able to achieve their goals. As an alternative, they want today to not close near its high and be a credible buy signal bar for tomorrow. They therefore will look to sell rallies.
But, since there were so many bull bars overnight, the bears will likely only scalp. They know that they will probably not be able to get today to close on its low and below yesterday’s low.
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 sold off on China trade talk news, but the selloff was overwhelmed by technical factors. Traders know that the bull trend on the daily and weekly charts is strong and there is no clear top. The Emini has already pulled back for a couple days. That was enough to make the bulls buy again. Today was a bull reversal day.
But because the 4 week rally is extreme, traders should expect a 2 week pullback this month. It will probably begin within a week after a test of 3100. However, the odds still favor higher prices after that.
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.
