Emini bulls need strong entry bar today

Trading Update: Friday July 15, 2022

Emini pre-open market analysis

Emini daily chart

• The Emini reversed yesterday and closed on its high after falling below the June 30 low. The bulls need strong entry bar today, which will increase the odds of higher prices.
• The bulls have a double bottom higher low major trend reversal, with yesterday being the signal bar. They hope today will be a strong bull entry bar closing on its high, increasing the odds of a rally back to the June 28 high and test of the June major lower high (June 2).
• The bears want the opposite; they hope that yesterday was a pullback from the breakout below the June 30 low, which was the neckline of a double top (June 28 and July 8).
• Bears hope the market will fall below the June 17 low and form a wedge bottom (May 20, June 17).
• If the bulls fail to get decent follow-through today, it would be another sign of more trading range price action.
• Overall, the market is still in the two-week-long trading range, which lowers the probability for both the bulls and bears.
• Today is Friday, so weekly support and resistance are important.
• Right now, the market is around the midpoint of the week, so that will likely be a magnet for most of the day.
• The bulls want the market to close above the midpoint, and the bears want the opposite.
• If today is a strong bull trend day, it is possible that the market could reach the open of the week, creating a bull bar on the weekly chart. The market would have to rally 40+ points from the current Globex price.

Emini 5-minute chart and what to expect today

• Emini is up 40 points in the overnight Globex session.
• Today will gap up on the open.
• The bulls will try hard for a bull trend from the open and an intense bull trend day, which would create a good entry bar for the bulls.
• Bears want the opposite, and for today to be a weak entry bar after yesterday’s strong bull reversal bar.
• More likely, today will open as a trading range and have limit order trading.
• As I often say, most traders will be better off waiting for 6-12 bars before placing a trade since there will likely be multiple reversals in the first hour.
• Traders can also wait for a credible signal bar such as a wedge bottom/top, double bottom/top, or a strong breakout with follow-through.
• Today is Friday, so there is an increased chance of a strong breakout late in the day due to the close of the weekly chart.

Yesterday’s Emini setups

Al created the SP500 Emini charts.

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

• The bulls are getting a second entry to buy following yesterday’s failed breakout of the 1.0000 big round number.
• The odds favor a rally over the next couple of weeks.
• The first target for the bulls is the July 27 high, which was likely an exhaustion bar.
• Next target for the bulls is the 2017 low (blue line) and the bottom of the May – June trading range, which is around the same price as the 2017 low.
• The odds are the market will return to the May – June two-month trading range, which will be a final flag.
• What traders do not know is if the market will reverse up strongly to the 2017 low and two-month trading range or will the market reach it by going sideways to up.
• Bears hope that the breakout below the 2017 low is a measuring gap just like all the other two-month trading ranges that the market has formed over the past six months (an example is the March low and May high measuring gap). However, the selloff is climactic and at major support, 1.000 big round number.
• The monthly chart has been in a trading range for over seven years and is likely to continue in that same trading range, which means the odds favor a failed breakout below the 2017 low range and a reversal back into the seven-year range.
• Today is Friday, so weekly support and resistance are important.
  • The market is at last week’s low (1.0072), so it will be an essential price level today.
  • Also, another thing to point out is the current bar on the weekly chart has a five pip tail on top, which means the open is the high of the current bar. This is another sign of aggressive sellers which increases the odds of the market reversing and this week’s exhaustion.
  • The week’s open is over 100 pips away which is probably too far to get there before today’s close. The bulls will try hard to make this week have as small of a bear body as possible.
  • Day traders should be aware that Friday creates the potential for a big move up or down on the smaller time frames as traders decide on the close of the weekly chart.

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

Al created the SP500 Emini charts.

End of day summary

• Today was a gap-up, the bull trend from the open that led to a trading range day.
• The bears had a parabolic wedge bottom on the open that was a test of the moving average. Although the channel down to bar 6 was tight, most bulls would exit above the first bull bar since it was a wedge bottom and test of the moving average.
• The 7:00 PT bull breakout bar was a surprise bar; however, the tail was big, and the next 4 bars also had big tails with small bodies. This increased the odds of trading range price action soon.
• At 8:50, the bulls had a wedge top and a double top with 10:25 (note you can also call the double top a higher high major trend reversal).
• Also, at 8:50, the market was getting increasing selling pressure. This means traders would be less willing to buy far above the moving average, increasing the odds of a selloff and test of the moving average. Another thing to mention is that 8:50 was also a wedge top. The odds favored a couple of legs down, which is why most bulls would exit below a bear bar closing on its low.
• The selloff down to 9:45 was weak (lacking consecutive bear bars). It was also a wedge bottom which increased the odds of a couple of legs sideways to up. An important thing to notice here is that the moving average is flat, which is an ample warning that the market is in a tight trading range, which means breakout mode. The market was in a bull trend from the open, so the odds favored an upside breakout of the tight trading range.
• The market rallied up 10:40 and formed a wedge top that was also a double top with 8:50. The rally up to 10:40 was tight; there were no consecutive big bull trend bars. Also, the market never broke out above the 8:50 high, so the odds favored a continued trading range, so bears would likely exit below 10:45 or 10:50. 
• The market continued sideways for the rest of the day and got a late breakout which caused the day to close near its high.
• Overall, today was a good day for the bulls. The bulls had a strong entry bar following Thursday’s bull reversal bar.
• The rally since Thursday is likely strong enough to lead to a second leg up. The first target for the bulls will be the July 8th lower high.
• The weekly chart closed near its open, which is a sign that they might rally soon. So far, the market is finding more buyers on the retest of the June 17 bear close than sellers, increasing the odds of a bounce. Note this week and the first week of July were both a test of the June 17 bear close. Although the market did not reach it, it is still a retest of the low close.

See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.

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Trading Room

Traders can see the end of the day bar-by-bar price action report by signing up for free at BrooksPriceAction.com. Al talks about the detailed S&P Emini futures price action real-time throughout the day in the BrooksPriceAction.com on trading room days. We offer a 2 day free trial.

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Charts use Pacific Time

When times are mentioned, 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.

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