Emini and Forex Trading Update:
Wednesday August 21, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini sold off in a bear channel yesterday, but were unable to close the gap above Friday’s high. The selloff is more likely a pullback from last week’s rally than a resumption of the August bear trend.
For the bears, last week’s rally was a double top pullback. However, the rally was strong enough so that at least one more test up is likely within a week.
Overnight Emini Globex trading
The Emini is up 22 points in the Globex session. It will therefore gap above yesterday’s bear channel. But it is still below the top of the 3 week trading range.
A bear channel is a bull flag. Traders expect a bull breakout and then a transition into a trading range. Consequently, while the Emini will gap up above the channel, a trading range is more likely than a strong bull trend from the open.
The FOMC minutes come out at 11 am PST today. Since the last meeting was unusually important, its minutes are extra important as well. Day traders should exit positions ahead of the announcement and then wait 10 minutes before resuming their trading. This is because there is usually a big move that reverses in the 1st couple minutes after any FOMC announcement. Trends usually do not start to become clear until after about 10 minutes.
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 sold off sharply last week to the bottom of its 5 month trading range. With yesterday’s reversal up, the bulls now have a micro double bottom. A rally from here would be a higher low major trend reversal.
But every leg up and down has reversed over the past year within a few weeks. As a result, every major reversal pattern only led to minor moves. There is no reason to believe that this pattern is about to change.
After 5 bear bars, the bulls will probably need more sideways bars before they can begin a leg up. Also, there is room to the August low. Many bulls will want one more brief move down to test that low and then a reversal up from there before concluding that the selloff has ended.
After 5 bear days, the bears believe that the 4 day tight trading range is a bear flag. Monday’s Low 1 bear flag failed. But if today’s low remains above yesterday’s low, today will be a sell signal bar for a Low 2 bear flag.
The bears know that every new low for the past year reversed up. However, there is still room to the August low for the bears to make 100 pips profit. They therefore would like to trigger a bear flag short signal some time this week.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been in a very tight range overnight. Yesterday is a buy signal bar on the daily chart. Today went 1 pip above yesterday’s high, triggered the buy signal, and then pulled back.
The overnight range is only 20 pips. There is no energy and day traders are scalping. They might be waiting for today’s FOMC minutes to be released at 11 am PST before they will be willing to hold onto positions for a swing trade.
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 gapped up but then traded in a tight range up to when the FOMC minutes were released at 11 am PST. There were a couple brief legs down, but the Emini closed near the high. This increases the chance of higher prices tomorrow.
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.
