Emini and Forex Trading Update:
Friday September 13, 2019
I will update again at the end of the day.
Pre-Open market analysis
Yesterday again gapped up, sold off, and reversed up from near the EMA. But, as was likely, yesterday was a trading range day. The bulls are trying to get a new all-time high this week. However, the 3 week rally is extreme. Consequently, there might be a pullback before the new high.
The 3 week rally has had 3 pushes up in a tight bull channel. It is therefore a wedge. But there is no reversal yet. Also, the bears will probably need at least a micro double top before they can get a reversal down. Therefore, the downside risk over the next few days is not great.
Today is Friday so weekly support and resistance can be important. This is especially true in the final hour. The all-time high is the most important price. If the bears get a selloff, then the 3000 Big Round Number and the open of the week would be magnets below.
Testing July all-time high
Even though the 3 week rally has been strong, there is typically hesitation at a prior high. This is because some of the bulls who bought at the high in June were very disappointed by the August selloff. This rally is making them whole. Many will sell out of their longs and wait to buy after a strong break to a new high or after a pullback. Other bulls who bought wisely at the August low will take profits at the old high, just in case there is a reversal from a double top.
It is impossible to know in advance if there will be enough bulls selling up here to create a 2 – 5 day pullback. However, 5 of the past 6 days had mostly trading range price action. That is a sign of hesitation and it increases the chance of more sideways price action around the July all-time high. This is especially true when the rally is in a wedge, like this one has been.
Overnight Emini Globex trading
The Emini is up 9 points in the Globex session. Everyone knows that the obvious magnet is the all-time high, which is about 6 points above the Globex high. The bulls would like a breakout and a weekly close above the 3031.25 all-time high today. Traders would see that as a sign of strength. It would therefore increase the chance of higher prices over the next several weeks.
Since 5 of the past 6 days were trading range days and the Emini is at major resistance, the odds favor a trading range day today. However, there is a slightly increased chance of either a huge breakout above resistance or a big reversal 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 formed a huge outside up day yesterday. It was a double bottom with last week’s low and a 2nd test of the bottom of the yearlong bear channel. It was strong enough to make sideways to up trading likely over the next week.
When there is a big outside up bar, the stop is below its low. That means the risk is relatively big for the bulls. Also, its high is at the top of a 2 week trading range. Therefore, the probability is lower since traders prefer to buy below the top of a trading range.
When the risk/reward is low and the probability is low, many bulls will wait to buy a pullback. That increases the chance of a 50 – 100 pip pullback before the rally will continue.
Also, the rally is at the top of the June bear channel and not far above the EMA. While the odds favor higher prices next week, the bulls need a close at least 30 pips above last week’s high to increase the chance of a quick move up to the August 6 high. If today stalls, then there will probably be a 2 – 3 day pullback before the resumption up.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart rallied early in the European session up to the bear trend line. It has been in a trading range since.
The selloff from the trend line was big enough to create a Big Up, Big Down, Big Confusion pattern. Confusion is a hallmark of a trading range. Consequently, traders will expect trading range price action in the US session. They will look for 10 – 20 pip scalps from reversals up and down.
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
Today was mostly another trading range day, but it also was a bear channel. It was a bear inside day and it is now a sell signal bar for Monday. The 3 week rally has had 3 legs up and it therefore will probably have a minor reversal early next week. But the odds still favor a new all-time high within a couple weeks.
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 Intraday Market Update page.
