Emini and Forex Trading Update:
Friday July 19, 2019
I will update again at the end of the day.
Pre-Open market analysis
Yesterday was a strong reversal up after Wednesday’s big bear day. I said yesterday before the open that the bears would not get immediate follow-through selling because of the strong bull trends on the daily and weekly charts. A strong bull trend usually has to go sideways before it will go down. The Emini is now sideways. This might continue up to the July 31 FOMC announcement.
Furthermore, I said that the odds favored at least a bounce over the next few days. Yesterday is probably the start. It is a buy signal bar for today. But after 3 strong bear days and a parabolic wedge rally, there still might be a 2nd leg sideways to down over the next week.
Overnight Emini Globex trading
The Emini is up 6 points in the Globex session. Today might test Wednesday’s sell climax high. Wednesday was a Bear Surprise Day on the daily chart in a bull trend. While a 2nd day sideways to down is likely, there is often a test of the top of the bear bar before that 2nd leg begins. Consequently, there is a magnet at Wednesday’s high of 3009.25.
Unless the bulls break above Monday’s all-time high, the odds still favor at least a small 2nd leg sideways to down over the next 2 weeks.
Yesterday’s 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. 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 is the middle of a 5 month trading range. Every trading range is a Breakout Mode pattern because it has at least one buy and sell setup.
This one has several. The range has higher lows and lower highs and it therefore a triangle. There is also a head and shoulders top and bottom. Finally, over the past 2 weeks, there is both a small double top and double bottom.
Since the chart is at the apex of a triangle, it will break out within 2 weeks. When a triangle breaks out, there is a 50% chance that the 1st breakout will fail. Furthermore, there is a 50% chance that the final successful breakout will be up and a 50% chance it will be down.
Day traders will look to buy near the bottom and sell near the top. Traders on the daily chart at this point should wait for the breakout. If it is strong and has follow-through, trade in the direction of the breakout. If there is a reversal within a few days, bet on the reversal.
Overnight EURUSD Forex trading
The EURUSD 5 minute chart almost complete reversed yesterday’s rally. The overnight selloff has been in a tight bear channel. Day traders will continue to only sell until the selling stops.
Since the selloff is now near yesterday’s low, the bears will take some profits soon. Their profit taking rally (short covering) should convert the bear trend into a trading range.
But after such a strong selloff, the range might only be 20 pips tall. If so, it will be difficult for the bulls to make money. Bears will sell rallies because the chance of a big reversal up after a tight bear channel is small.
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
The Emini sold off in a huge Bear Trend From The Open after testing Wednesday’s sell climax high. Since today had a bear body and it closed near its low, today is a sell signal bar on the daily chart for Monday.
Today meets the minimum objective of a 2nd leg sideways to down after Wednesday’s Bear Surprise Bar. The selloff will probably test the June 26 or June 12 lows between 2900 and 2950 over the next 3 weeks.
It is important to note that the Emini has been sideways for 3 weeks with many reversals. This might continue until the July 31 FOMC meeting.
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.
