Trading Update: Monday July 10, 2023
S&P Emini pre-open market analysis
Emini daily chart
- The Emini daily chart is forming a contracting trading range, which is likely a breakout mode pattern. This is a warning that the bulls are bears becoming balanced and neutral.
- The market is between two important price levels, the June 26th low and the June 16th high.
- The market is Always In Long and holding above the moving average, the market. However, the market would not be begging to go sideways if the bulls had a big advantage.
- Breakout mode is a type of trading range, which means most breakouts fail and reverse. This means traders should use caution and expect sideways price action until there is a strong breakout with follow-through.
- The bulls have done well over the past couple of weeks, preventing strong bear bars. This is a sign that the bulls have slightly more control over the market than the bears.
- Overall, traders should expect sideways trading and lots of disappointment for both the bulls and the bears.
Emini 5-minute chart and what to expect today
- Update: I forgot to mention that traders should expect 75% chance of two hours of sideways trading on the open due to last Friday’s consecutive sell climaxes. There is a 50% chance of follow-through selling followed by two hours of sideway trading. Lastly, there is only a 25% chance that today will be another bear trend day.
- Emini is down 9 points in the overnight Globex session.
- The Overnight Globex Market formed a bear channel during last night’s session and had a rally during the early morning hours.
- The rally up over the past 5 hours is strong, and the odds are the market will get a second leg up.
- The downside is probably limited over the next couple of hours. This means the open will probably be a trading range or a bull trend and, less likely, a bear trend.
- If there is a selloff on the open, it will probably be limited and lead to a trading range.
- As I often say, traders should expect a lot of sideways trading on the open. Most traders should consider not trading for the first 6-12 bars since the open often forms a trading range.
- Most traders should focus on catching the opening swing that often begins before the end of the second hour. There is an 80% chance that the open will form a double top/bottom or a wedge top/bottom. A trader can likely wait for one of these patterns to form and have a reasonable chance of catching a swing.
- Overall, traders should assume that a trading range is likely until there is a clear breakout with follow-through.
Friday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The Bulls got a strong upside breakout last Friday. This was the entry bar for the wedge bull flag buy signal bar formed last Thursday.
- Last Friday’s bull breakout is strong enough to increase the odds of a 2nd leg up.
- There are likely trapped bears who sold during last Friday’s rally. Those bears got trapped during the strong rally and will probably use and pullback to exit their shorts with a smaller loss.
- The odds are that the bulls will get at least a small second leg up following last Friday’s bull breakout, even if the market has a pullback first.
- Overall, traders should expect a 2nd leg up, but be prepared for a possible pullback first.
Summary of today’s S&P Emini price action
Al created the SP500 Emini charts.
End of day video review
Here is YouTube link for those who cannot see video popup:
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
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.