Posted 7:05 a.m.
Limit order traders were able to make money buying and selling in the first half hour, and that happens in 2 sided markets. The Emini is beginning with a trading range and will probably be in breakout mode. The rally from yesterday’s low was strong enough so that any early selloff will probably be bought for a major trend reversal. There were many big bars early today and several reversals. Stop order traders need to be patient and wait for a clear breakout in either direction and then look to enter on pullbacks. If there is a strong breakout either way, traders will enter at the market or on small pullbacks. Until then, traders will continue to look to buy low, sell high, and scalp. The odds still favor at least 2 hours of sideways to up trading after any early selloff, but if the bears take control, traders cannot be in denial and they must trade the bear trend.
At the moment, the Emini is still Always In long, but the bears could easily reverse it with a single bar. The early trading range will probably last for 1 – 2 hours and day traders are searching for the top and bottom of the range. There might then be a measured move up or down after the breakout. Traders will continue to mostly scalp until there is a strong breakout.
My thoughts before the open: The day trading tip is to look for a trend reversal up today
After consecutive sell climax days and with a big report tomorrow, traders learning how to trade the markets should expect the selling to end and for the Emini futures contract to form a major trend reversal within the first hour today. There is always the chance of a strong selloff early, but there is a 70% chance of at least 2 hours of sideways to up trading that should begin within the first hour. The swing trading strategy is to look to buy the reversal up, or to wait for a strong breakout up or down and then enter for a swing in the direction of the breakout.
Best Forex strategy for online currency trading
The EURUSD had been very strong over the past month on the daily chart. Traders learning how to trade Forex markets should see that there was a 7 bar bull microchannel on the daily chart that ended last week. Yesterday’s rally will probably be a buy climax that leads to a week or two of sideways to down trading. The dollar is oversold against other currencies and there should be Forex swing trades for the bulls today. Tomorrow’s unemployment report might limit the size of the moves today.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
After 2 strong bear trend days, today rallied, as expected. It tested the top of the channel and sent sideways to the bottom of the channel. There was a major trend reversal at 11:35 that was followed by 2 legs down.
Tomorrow’s unemployment report before the open will probably create a gap up or down on the S&P Emini futures contract. If there is a big gap, the odds for a trend increase. The bigger the gap, the more likely there will be a 2nd leg in the same direction. The price action trading strategy will be to assess the gap and see if there is immediate strong follow-through or a reversal with a strong signal bar. Swing traders should be ready.
Since the Emini has been in an ever-tightening trading range for 6 months, it is entirely possible that the report leads to more trading range behavior. However, the odds for a swing trade in the first hour or two are good.
Tomorrow is also a Friday, and last week’s low and the weekly moving average are magnets, especially in the final hour.
The best Forex trading strategy for tomorrow is the same as for the Emini. Be ready for a swing trade up or down. The EURUSD is overbought and had a bear reversal bar on the daily chart. The AUDUSD is overbought, as is oil and might get more selling overnight and tomorrow.
See the weekly update for a discussion of the price action on the weekly candlestick chart and for what to expect going into next week.
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, and a 2 day free trial is available.
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.
