Trading Update: Friday August 6, 2021
Emini pre-open market analysis
Emini daily chart
- Small breakout to new all-time high and above 10-day tight trading range in strong bull trend, but closed below last week’s all-time high. An Emini bull flag before unemployment report.
- Yesterday was a good entry bar for Wednesday’s ioi buy signal and Tuesday’s OO buy signal (consecutive outside bars).
- Traders want to see consecutive closes above the 10-day trading range before concluding that the breakout will lead to a 60-point measured move up, based on the height of the trading range.
- The bears want a reversal down today, which would make traders believe that the bull breakout has failed.
- Today’s unemployment report could be a catalyst for a strong move up or down. If there is a strong bull breakout, the bears will try to create a reversal down later in the day.
- If they get a bear bar on the daily chart closing near its low, traders will suspect that the breakout has failed and that the Emini might reverse down to the bottom of the 10-day range, or lower.
- Today is Friday so weekly support and resistance can be important, especially in the last hour. The most important magnets are the open of the week, the low of the week, and last week’s high, which is also the July high and the all-time high.
Emini 5-minute chart and what to expect today
- Emini is up 4 points in the overnight Globex session just after the jobs report. It will probably open with a small gap up. Small gaps usually close in the 1st hour.
- Today is the follow-through day after yesterday’s small break to new high. The bigger the bull bar on the daily chart, the more likely today will go higher next week. The bulls want a strong bull trend today.
- The bears want a big bear trend day, but they do not need that. Even a small bear day today will increase the chance of lower prices next week. The bigger the bear day and the more it closes on its low, the more likely there will be a reversal down.
- I said last week that August should go above July’s high.
- But I said it might only go a little above and then reverse down because a 7th bull bar on the monthly chart would be extremely unusual.
- There is both an increased chance of a bull trend day and a bear trend day today. Traders are deciding if the yearlong bull trend will continue or begin to pull back for 2- to 3-months.
Yesterday’s Emini setups
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- Wednesday was an outside down day at the resistance of the July 6 high. It could be the start of a reversal down from a double top bear flag.
- Yesterday was a small day, but it had a bear body. Even thought the bear body was small, a bear body was the minimum needed to confirm Wednesday’s reversal down. A confirmed bear breakout is likely to have at least slightly lower prices.
- Today so far is a big bear day just after the jobs report.
- Since the July 21 low was a sell climax, traders expect a 2nd leg up from a higher low. Therefore, the current selloff should reverse up from above that low. There is sometimes a double bottom after a reversal up from a wedge bottom.
- Because the EURUSD is near the bottom of a yearlong trading range and most trading range breakouts fail, traders expect a reversal up soon back to the middle of the range.
- That middle area is also around the June 25 major lower high, which was the start of the month-long bear channel and therefore an important magnet.
- The July low is the neckline of the July 7/July 30 double top bear flag. A 150-pip measured move down would be a test of the November bottom of the yearlong trading range at 1.16.
- The bears need a strong break below the November low before traders will look for much lower prices.
- Since most breakout attempts fail, there should be more buyers than sellers below that low and below the July low. Consequently, the EURUSD should begin a move back up to the June 25 high at around 1.20 before going much lower.
Last day of the week so weekly support and resistance can be important today
- Today is the last day of the week. Weekly support and resistance can be magnets, especially in the final hour.
- This week so far is a bear bar closing near its low.
- Its high and low are within last week’s range so this week so far is an inside bar. It is therefore both a buy and sell signal bar for next week.
- It is a Low 1 sell signal bar after a 9-bar bear micro channel.
- The more the week closes on its low, the more likely next week will trade below this week’s low.
- However, because the EURUSD is near the bottom of a yearlong trading range, it probably will have a difficult time falling much below 1.16 at the bottom of the range.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
- Trading range open, and today remained a trading range day, despite a late bear trap.
- Entire day became big triangle. Since bull trend on 60-minute chart, more likely to get bull breakout Monday, but triangle late in bull trend is often Final Flag.
- Bears want 10-day tight trading range to be the final bull flag on daily chart, but bull bar on daily chart is weak sell signal bar for Monday.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
Traders can see the end of the day bar-by-bar price action report by signing up for free at BrooksPriceAction.com. I talk about the detailed S&P Emini futures price action real-time throughout the day in the BrooksPriceAction.com trading room. We offer a 2 day free trial.
Charts use Pacific Time
When I mention time, 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.
In the EURUSD daily there was a massive 300 pip bear-move on june 15-16. No real profit taking followed. There has to come a MM down, the EURUSD has to break out to the downside. It tried to reverse up 3 times and failed. I believe it will break out downwards very early on monday.
Hi Al, why 11L is not a swing down sell after ioi 8 9 10?
If you’re talking about Aug 5th, I think that the 8 bar bull micro channel working higher is too tight, odds favor buyers below and a reversal attempt by the bears will probably be minor.
And also setting up for a good possibility of a wedge (7,9,?) bottom, H2, right at the ema.