Trading Update: Thursday July 27, 2023
S&P Emini pre-open market analysis
Emini daily chart
- The Emini formed an outside bar yesterday within a tight trading range. Outside bars are generally trading range bars that force traders to buy or sell at the top and bottom of the range. This increases the odds of sellers above yesterday’s high and buyers below.
- The market bulls are hopeful that the channel on the daily chart will continue; however, it will likely begin to go sideways to down soon.
- The market has spent over 35 bars away from the moving average, which indicates strong buying. It is also a sign of climactic behavior.
- The moving average is a representation of a fair price. Bulls are happy to buy above it as long as the momentum justifies paying a premium to be long. However, once the momentum begins to stall and the market goes sideways, fewer bulls are willing to buy far away from the moving average. This is partly why the market is starting to go sideways.
- The bears need to develop more selling pressure to take control of the market. Until then, the best the bears can hope for is sideways trading and a test of the moving average.
- Overall, the market will probably test near 4,500 before the bulls can get up to 4,700.
Emini 5-minute chart and what to expect today
- Emini is up 35 points in the overnight Globex session.
- The Globex market has been in a small pullback bull trend on the 15-minute chart for most of the overnight session. This is due to yesterday’s FOMC bull breakout.
- The rally during the early morning session will likely limit the downside today. This means a bull trend or a trading range is more likely during the U.S. Session.
- The bulls are likely becoming exhausted due to the early morning rally. This means that a trading range open lasting a couple of hours is most likely.
- As I often say, most traders should consider waiting 6-12 bars before placing a trade. The open usually has many sideways trading and failed breakouts.
- The bars are often big on the open, and if one is not careful, they can take 2-3 significant losses and spend the rest of the day desperately trying to get back to breakeven.
- By waiting for 6-12 bars, one gains certainty on the day structure, giving them an edge.
- Traders should also focus on trying to catch the opening swing trade that often begins before the end of the second hour. It is common for the market to form a double top/bottom or a wedge top/bottom. This means a trader can often wait for one of the abovementioned patterns to form and enter on a strong entry for a swing lasting a couple of hours with at least a 40% chance of doubling the opening range.
- Lastly, traders should pay close attention to the day’s open as it will likely be an important magnet.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD rallied early this morning and sold off recently.
- The bears have a six-bar bear microchannel on the daily chart. This increased the odds of sellers above and a second leg down.
- The bears are still trying to close the June 22nd breakout point high. This is an open gap, and since the daily chart is likely in a trading range, the odds are it will close.
- The July 12th low is also a magnet because it is a possible exhaustive buy climax. When the market is in a trading range, it is common for the market to fall below strong breakout bars and reverse up after. This means the market might fall below the July 12th low and reverse up shortly after.
- The bulls want today’s early morning rally to lead to a double bottom over the next few days and for the market to reverse.
- Overall, the odds are that the bears will get a second leg down on the daily chart after the 6-bar bear microchannel.
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.