Trading Update: Wednesday July 26, 2023
S&P Emini pre-open market analysis
Emini daily chart
- The bears are hopeful that yesterday is forming a micro double top with the July 19th high. Next, they want a break below the neckline (July 20th) and a measured move down to the moving average and the 4,500 big round number.
- The Emini is testing the July 19th high and will likely find sellers at this price level. This also corresponds to 4,600, which is a likely resistance level.
- The market has been above the moving average for over 35 bars which is a sign of strong momentum for the bulls.
- The bulls are happy to buy above the moving average when the momentum justifies buying at a more expensive price.
- Traders see the moving average as a fair price; however, once the market begins to go sideways, fewer bulls are willing to buy far away from the moving average. This means that the market has to get closer to the moving average; in this case, the market will likely have to reach the moving average.
- At the moment, the odds favor a 100-point selloff down to 4,500 before the bulls get a 100-point rally up to 4,700.
- Overall, traders should expect sideways to down trading over the next few days.
Emini 5-minute chart and what to expect today
- Emini is down 18 points in the overnight Globex session.
- Today, there is an FOMC Report at 11:00 AM PT/ 2:00 PM EST. Traders should expect the market to try and get neutral going into the report. This means that the opening may have a lot of trading range price action.
- As I often say, most traders should consider not trading the opening session’s first 6-12 bars. The open usually has multiple reversals and failed breakouts, so one can quickly take 1-3 losses. If this happens, they will likely find themselves desperately spending the rest of the day trying to reach breakeven.
- The opening bars can often be big, so if trading, it is important to be aware of this and trade small.
- When the fed report is released, a good rule of thumb is to trade 20% of one’s normal position size.
- Traders should wait for the close of the second bar after the FOMC report is released at 2:00 PM EST before placing a trade.
- Overall, traders should expect a lot of trading range price action on the open. However, they must not be in denial if the market starts to form strong trend bars on the open.
Emini intraday market update
- The Emini went sideways in a tight trading range for the first hour of the day.
- The Bears ended up getting a 2nd leg down following the gap down on the open. However, the market formed a parabolic wedge bottom and reversed around the bar 18 low.
- The bulls are testing the high of bar 3. However, there are probably sellers around the bar 3 high. This means that the market will likely begin to go sideways soon.
- Today is an FOMC day, and the report will be released at 2:00 PM EST. Traders should be flat for at least 30 minutes going into the report and consider not trading for the first 10 minutes following the report.
- Traders should be open to anything once the report is released and treat the release of the report like a new day.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD is stalling just above the June high.
- The bears have done a great job creating selling pressure over the past six trading days.
- However, it is beginning to form a parabolic wedge following the strong rally up to July 18th. These reasons increase the odds of going sideways over the next few weeks.
- The recent downside breakout is strong enough for a second leg down. Any rally will probably lead to a lower high and fail to surpass the July 18th high.
- The bulls are hopeful that the recent selloff is a buy vacuum test of the Jun2 22nd high that will lead to a higher lower and a test of the July high.
- The bulls will likely need to form a double bottom with the July 25th low at a minimum before they have a chance at a reversal up. This means the first reversal from the six-bar bear microchannel will likely be minor.
- Overall, traders should expect sideways trading for the next several days.
Summary of today’s S&P Emini price action
Al created the SP500 Emini charts.
End of day video review
Here is YouTube link if video popup blocked:
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.