Trading Update: Wednesday July 7, 2021
Emini pre-open market analysis
Emini daily chart
- Yesterday’s low was below Thursday’s low so daily chart finally had a pullback after 11-day bull micro channel.
- Pulled back below 60-minute 20-bar EMA for 1st time in 70 bars so that Emini bull streak ended as well.
- Traders were willing to pay an above average price and now finally could buy at the average price. That reduces the downside today.
- Buy climax usually leads to trading range therefore trend reversal down unlikely on daily chart.
- Since buy climax was extreme, might have to go sideways for several days, especially with yesterday closing in the middle of the range.
Emini 5-minute chart and what to expect today
- Emini is up 5 points in the overnight Globex session.
- Big Up Friday, Big Down and Up yesterday creates confusion and increase chance of trading range for a few days.
- 60-minute 20-Gap Bar buy signal created yesterday’s rally. Traders expected test of Friday’s high. Yesterday’s rally met the minimum expectation.
- Extreme buy climaxes on daily and 60-minute charts so probably limited upside over next couple weeks, but should make at least one more new high.
- Trading range likely so increased chance of at least one reversal every day for several days.
Yesterday’s Emini setups
Here are several reasonable stop entry setups from yesterday. I show each buy entry with a green rectangle and each sell entry with a red rectangle. Buyers of both the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).
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. These therefore are swing entries.
It is important to understand that most swing setups do not lead to swing trades. As soon as traders are disappointed, many exit. Those who exit prefer to get out with a small profit (scalp), but often have to exit with a small loss.
If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- Yesterday was big outside down day, but it only broke below the June 2 low by 1 pip.
- Today is the follow-through day after yesterday’s small breakout. So far, today is a bull inside day, which is weak follow-through.
- The bears need a close below the July 2 low to increase the chance of the selloff testing the March 31 low.
- If today has a bull body and closes near its high, it would increase the chance of a reversal up from a micro double bottom with the July 2 low and a lower low major trend reversal with the June 18 low.
- The bulls need a big bull bar closing near its high for traders to expect a reversal up.
- If falls below Friday’s low for a few days and reverses up, then wedge bottom with June 18 low and Friday’s low. That could lead to a 2-week bounce.
- Since many bars with tails for 3 weeks and near bottom of yearlong trading range, should bounce and test June 25 high soon, but might have test March 31 low first.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
- Reversed down from a new high on the open, but reversed back up from a parabolic wedge sell climax at the 60-minute EMA, which was support yesterday.
- Rallied back to the high, but entered a trading range for the rest of the day. Because the day closed near its high and the reversal up from the 60-minute MEA was strong yesterday and today, traders expect at least slightly higher prices.
- But after yesterday’s pullback in an 11-bar bull micro channel, the bulls are probably unwilling to buy aggressively without a week or two of sideways trading.
- Traders expect higher prices, but not much higher over the next couple weeks.
- Targets above are the top of the bull channel on the daily chart, which is around 4,500, and a measured move up to 4,404 based on the 3-month trading range.
- The bears can get a reversal at any time, but bulls will continue to buy every 1- to 3-day pullback.
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 Time
When I mention time, it is USA Pacific Time. The Emini day session opens at 6:30 am PT, and closes 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.
Trying to understand the trigger of buying after bar 17 as I was relactent buying there. It was after SC with 6 segnificent bear bars, bar 17 was inside doji and all of it below EXP20. If not mistaken Al says wait for HL prior buying. Thoughts?
Yes, you’re right. Bar 17 is a setup for more advanced trader, ready to scalping out if the MKT might fail around EMA. Bar 21 is a better long setup, closed on high and far above EMA.
Thanks for clarifying this.
If I may add, entering the breakout from the high or low of a doji (doji, for me, is a body no greater than 2 ticks) e.g. b17, on a stop order is quite high probability, with stoploss at the other side of the doji. For example, just look at the opening 3 hours of today.
Hello Dr. Brooks,
Is Bar 63 a lower probability setup because of the 4 bear bars preceding it? (Must go for reward 2x risk then)?