Trading Update: Friday July 29, 2022
Emini pre-open market analysis
Emini daily chart
- The bulls got follow-through after the July 27 breakout. This increases the odds that the market will reach the June 2 high soon, which is the last major lower high. The bulls are trying to change the character of market and want another strong bull close today.
- If the market can get above the June 2 high, the market will be in a bull trend or a trading range and no longer in a bear trend on the daily chart.
- The bulls broke above the neckline (June 28) of a double bottom (July 14) which projects up to the June 2 high.
- The bears hope the current rally will lead to a wedge top with July 8th, 22nd, and today. The problem the bears have is that the breakout points from the July 14 rally are forming multiple gaps and micro gaps, which lower the probability of a successful wedge top.
- The bears have not had an easy time making money since July 14, which increased the probability of an upside breakout.
- The bulls want the market to race up to the June 2nd high as fast as possible. That would increase the probability of a breakout above the June 2nd high. The bulls want the June 2nd high to be the neckline of a larger double bottom (June 17th and July 14th) and a measured move up.
- More likely, the bulls will not break far above the June 2nd high, and the market will continue sideways and remind traders that the market is in a trading range.
- This is a crucial moment for the bulls. If the bulls can continue to get bull trend bars closing near their highs, that would increase the odds that we have seen the low of the year, and could rally much higher.
- However, the bulls will need to do more and impress traders as they did during the October 2021 rally. Otherwise, traders will begin to sell out of longs, and the market will continue sideways.
- Today is Friday, so weekly chart magnets are important.
- So far, the bulls have a good-looking bull close on the weekly chart. The bulls want the week to close near its high or with as small of the tail as possible.
- The bears want to create as big of a tail as possible and even force the market to close below the high of last week (4,016.25, but not likely to get there).
- Overall, today will be an interesting day for the bulls. Can they get another strong bull trend bar which would further change the character of the market on the daily chart, or will today be disappointing for the bulls and be a doji or even a bear bar closing on its low.
Emini 5-minute chart and what to expect today
- Emini is up 5 points in the overnight Globex session.
- The market has been going sideways for most of the Globex overnight session.
- The odds are today will have a trading range open as bulls and bears decide how the week will finish.
- As stated above, the bulls have an interesting opportunity to get another big bull bar closing on its high, which would change the character of the market and make the market Buy The Close.
- This means traders should be open to a similar pattern as yesterday, and if the market forms a wedge bottom or double bottom, traders should be mindful of an opening reversal up and small pullback bull trend day.
- More likely, today will be a neutral day and disappoint the bulls.
- As always, traders should have the mindset “until there is a breakout, there is no breakout” during the intra-day session. If today is going to be an intense trend day, there will be plenty of opportunities to enter the trend’s direction.
- On the open, it is essential not to be cautious as reversals are frequent. In general, there is a 50% chance of the first breakout not being successful and the market reversing in the opposite direction.
- As I often say, traders should consider waiting for 6-12 bars before placing a trade since the market usually goes sideway during that time.
- The essential thing on the open is to not be in denial of what is going on. If the market is trending in one direction, find a way to enter. If the bars overlap and go sideways, assume all breakouts will fail until there is a clear breakout.
- Lastly, today is the last day of the week, so there is an increased risk of a strong/sudden breakout late in the day as the market decides on 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
- Yesterday had a big tail below and closed at its open. The bears who sold the close on July 26 were disappointed and bought back shorts at the July 26 close.
- The market is in a tight trading range at the moving average, which means the market is in breakout mode. This means the probability is getting close to 50% for both the bulls and bears.
- As I have been saying, the two targets are the 2017 low and the 1.0000 considerable round number. Often where there are two obvious targets, the market will probe in the middle of the two targets.
- Ultimately, the odds favor a test of the 2017 low and bottom of the two-month trading range (May – June).
- Even if the market reaches the 1.0000 big round number, traders will be confident that it will have to return to the 2017 low.
- Some traders would like the market to retest the 1.0000 big round number and form a double bottom. Next, those traders would like a breakout above the neckline (July 21) and a measured move up to the June 27 high.
- Today is Friday, so weekly support and resistance are important.
- The market is only 20 pips below the open of the week (1.0213). The open of the week is close enough that it is an obvious magnet that may get tested today.
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.
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.
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.
Hi Brad
Like the video presentation more than usual only text. It is clearer and provides more info. I think it definitely gives you a chance to be more in depth with your analysis and explaining what happened on the daily price action chart. Thanks for introducing this new approach, I like it!
Brad’s Emini End of Day Video review added.
Replaces the end of day commentary.
Thoughts all?
I like it – not too long 6min, a good summary and cover more than what usually Brad writes! Not sure there is an easy way to copy the youtube transcript to have the words for reference?
I was long above bar10, but got stopped out below b7, as that was where I measured the 50% PB. However!
Al has written here this it was, in fact, a 50% PB, but I’m so confused b/c when I measure from the LoD, 50% is around the L of b7…why on this chart is 50% considered at around the middle of b3? Is measuring from the Low of the day incorrect?
I never believed 50% PB’s were that exact. This turned out to be about a 60% PB because of the wedge but regardless its pulled back relatively half way of the spike.
You have bought during the 3rd leg wedge top development, not and ideal place to look for swing unless you are for scalping. It was a parabolic wedge top development whereby 1st bar of the day was the 1st leg. I don’t think that bar 7 was an ideal stop location for swing, for scalp the low of bar 10 was more appropriate but shouldn’t be hit if you are scalping. The more appropriate location for swing stop was the low of bar 76 from previous day as it was the last major HL following bar 79 breakout. It was also nearly to the tick 50% PB from the wedge DT bars12 & 16 and ideal place for bulls buying lower given it was 3rd wedge bottom leg leaning on the bull trend line from previous day.
As AL says 90% of time BO phase followed by PB then a Channel or TR. So I think bar 10 was test of high of PM after bull BO above PM’s high, it formed spike and channel bull trend and it is even obvious on 5-min chart line.
As AL says 80% of days have swing trade that starts in the first 90 minutes and about half of time followed by the opposite swing trade
So after the third leg of micro wedge top we have three consecutive bear bars and the third bar is bear surprise closing its low so we can expect 70% of time measured move down based on the size of the body. However the low of that climactic reversal is major support of PM in which buy limit orders were
Thanks Brad for all inspiring and helpful information you have provided