Emini bulls taking partial profits

Trading Update: Wednesday August 3, 2022

Emini pre-open market analysis

Emini daily chart

• The sideways trading over the past two days is likely due to bulls taking partial profits than bears establishing short positions.
• The first reversal down from the July 29^th bull breakout will likely fail and lead to a second leg up and test of the June 2^nd high.
• The market is stalling at the June 9^th high, the bar that broke below the June 2^nd tight trading range.
• The market is testing the July 9^th high to see if bears are willing to sell at this price level again. The market was strong at this price level, so traders want to see if the bears will sell again aggressively.
• The more important target is the June 2^nd major lower high. Bears want to prevent the market from going above the June 2^nd high, so they can argue the market is still in a bear trend.
• The bulls want to get above the June 2^nd high because that would make the market either a bull trend or a trading range and end the argument of a bear trend.
• The past two days were bulls taking partial profits and some bulls wanting to buy lower.
• The bulls also have a measured move target from the July 14 double bottom and breakout above the neckline (June 28), which projects up to the June 2^nd high.
• The market is stalling back at the midpoint of the tight trading range of May 27 – June 8. This is a sign of weakness by the bulls. This also tells traders that the market sees the May 27 – June 8 tight trading range as a fair price.
• Overall, traders will pay close attention to how the market reaches June 2. If the market can breakout far above the June 2^nd high, that would be a sign of higher prices to follow.
• If the market does not get far above the June 2^nd high and fails to close above the June 2^nd high, it would be a sign of more trading range price action.

Emini 5-minute chart and what to expect today

• Emini is up 23 points in the overnight Globex session.
• The Globex market is in an overall trading range. The overnight price action sold off to below yesterday’s lows and is back in the middle of the past two trading days.
• At the moment, the Globex price action looks neutral. The bulls have a possible measuring gap with yesterday’s high at 11:15 PM PT and today’s low at 3:45 PM PT.
• The bulls hope this negative gap will lead to a measured move up to around yesterday’s highs.
• As always, traders should assume today will be a trading range open.
• Traders should be patient on the open and wait for a credible setup such as a double top/bottom, wedge top/bottom, or a strong breakout with follow-through closing far above resistance/support.
• The key to the open is to be patient and understand that most breakouts fail on the open.
• Also, there is no rush to enter a swing trade because the market usually goes sideways for the first 6-12 bars.
• Lastly, if today is going to be a strong trend day, there will be plenty of time to enter in the direction of the trend.
• It is easy to be tempted to want to bet on a successful breakout on the open, and it is often a mistake. It is easy to take a few losses on the open and spend the rest of the day trying to get back to breakeven.
• It is possible today is a bull trend day since the odds favor a second leg up on the daily chart (see above for details).
• The most important rule is to trade the market before you, not what you hope the market will do.

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 bears got a strong bear breakout yesterday, closing on its low. However, the problem for the bears is that it is a big bear bar forcing traders to sell at the bottom of the tight trading range, lowering the probability for the bears.
• Bears hope yesterday’s breakout will lead to a successful breakout below the neckline of July 27 and a measured move below the June 14 low.
• More likely, the bears will be disappointed with today, and the tight trading range will continue.
• The bulls see yesterday as a breakout pullback buy setup. They hope today will be a bull bar closing on its high, leading to a test of the 2017 low.
• Overall, the market is deciding on testing the 2017 low or the 1.0000 big round number. Right now, the odds are 50% – 50% which magnet will get tested.
• The market will probably test the 2017 low regardless of if the market has to test the 1.0000 big round number first.
• The best case for the bulls would be if the market test down to the 1.0000 big round number and forms a double bottom with the July 14 low. Then the bulls would have a reasonable chance at getting a breakout above the neckline (August 2^nd) and a measured move up to the June 27^th high.    

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

Al created the SP500 Emini charts.

End of day video summary

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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