Emini and Forex Trading Update:
Monday July 22, 2019
I will update again at the end of the day.
Pre-Open market analysis
After a month-long parabolic wedge buy climax, the Emini had a Bear Surprise Bar on Wednesday. That typically leads to at least a small 2nd leg sideways to down.
In a strong bull trend, there is often a test of the top of that bar before the 2nd leg begins. Friday might be the start of the 2nd leg sideways to down. In fact, it could be a one-day 2nd leg sideways to down and therefore the end of the pullback.
More likely these recent big bear days and the 5 week parabolic wedge top will lead to a correction with more bars. A wedge reversal usually tests the bottom of the 1st or 2nd pullback of the wedge rally. Traders expect a 2 – 3 week pullback to between 2900 and 2950.
Because Friday was a bear bar closing on its low, it is a sell signal bar for today. But, it is also at the bottom of a 3 day tight trading range. That lowers the probability for stop entry traders. There might be more buyers than sellers below its low. Also, the Emini might stay sideways into next week’s FOMC announcement.
Overnight Emini Globex trading
The Emini is up 9 points in the Globex session. Because Friday was a sell climax, there is only a 25% chance of a big bear trend day today. Additionally, there is a 75% chance of at least a couple legs of sideways to up trading beginning by the end of the 2nd hour today.
There have been big swings each day for several days, despite the 3 day tight trading range and the 3 week trading range. Traders will expect at least one swing trade today. However, after several big days and reversals, today’s range will probably be smaller and today will probably have more trading range price action.
Friday’s setups
Here are several reasonable stop entry setups from Friday. I show each buy entry with a green rectangle and each sell entry with a red rectangle. I rarely also show limit order entries and entries on the close of bars. Buyers of the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day.
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.
EURUSD Forex market trading strategies
The EURUSD daily Forex chart has lower highs and higher lows. It is therefore in a triangle. Furthermore, there is a head and shoulders top and bottom. Every head and shoulders pattern is also a triangle. The market is now at the apex of the triangle. Consequently, there will probably be a breakout within a couple of weeks. Traders might be waiting for next week’s FOMC announcement.
It is important to understand that a breakout mode pattern has a 50% chance of a bull breakout and a 50% chance of a bear breakout. Additionally, there is a 50% chance that the 1st breakout up or down will reverse.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been in a 25 pip range overnight, just above the bottom of the 3 week trading range. The location is better for the bulls than for the bears because traders expect reversals in a tight trading range.
There is no sign that the 5 minute chart is about to breakout. Therefore, day traders are looking for reversals and 10 pip scalps while they wait for a breakout.
As I said above, if the bears get a strong breakout below today, there is a 50% chance it will fail. Traders would then look for a reversal back up within a couple days.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Here are several reasonable stop entry setups for today. I show each buy entry with a green rectangle and each sell entry with a red rectangle. I rarely also show limit order entries and entries on the close of bars. Buyers of the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day.
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.
End of day summary
There is a sell signal bar on the weekly chart. But the Emini today reversed up from a test of Friday’s low and last week’s low without triggering either sell signal. Instead, today closed with a bull body. Today is therefore a buy signal bar on the daily chart.
After a 7 week bull micro channel on the weekly chart, this week will probably trade below last week’s low at some point this week. However, the best the bears can probably get is a 2 – 3 week pullback.
The Emini has been in a tight trading range for 4 days. It is within a bigger 3 week range. With a sell signal bar on the weekly chart and a buy signal bar on the daily chart, the Emini is in Breakout Mode. Traders expect that it will probably be mostly quiet ahead of next week’s FOMC report.
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. 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 Standard Time
When I mention time, it is USA Pacific Standard Time (the Emini day session opens at 6:30 am PST, and closes at 1:15 pm PST). You can read background information on the intraday market reports on the Intraday Market Update page.
