Emini and Forex Trading Update:
Monday July 29, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini made a new all-time high again on Friday. However, there is a potential small wedge rally on the daily chart that began with the July 18 low. It is nested within a 5 legged wedge that began with the June 11 high. A wedge is a climax and it typically attracts profit takers.
Furthermore, the weekly chart has an 8 bar bull micro channel. Since that is unusual, it, too, is a buy climax.
Also, the weekly chart had a big bear bar 2 weeks ago. That is a weak buy signal bar. Consequently, there are probably more sellers than buyers not far above its high.
This rally might continue a little longer. There might even be a brief sharp rally after Wednesday’s FOMC announcement. But the bulls will probably take profits soon. That will result in a 2 – 3 week pullback to between 2900 and 2950.
Overnight Emini Globex trading
The Emini is up 1 point in the Globex session. It is at the top of a 4 week trading range. A trading range means that traders look for reversals up from selloffs and down from rallies. Consequently, there is a reduced chance of a big bull day, despite Friday’s rally.
The Globex session has been in a small range. The bar 2 weeks ago on the weekly chart was a big bear. Also, the weekly chart is in a buy climax. These factors additionally reduce the chance of a big rally today.
Friday was a buy climax on the 5 minute chart. There is therefore a 75% chance of at least 2 hours of sideways to down trading today beginning by the end of the 2nd hour. It might have begun in the final minutes on Friday.
The dominant force operating on the Emini for the next three days is the uncertainty of Wednesday’s 11 am PST FOMC announcement. That increases the chance of trading range price action until then.
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 broke below a head and shoulders top neck line and then below the May low. This is a resumption of the yearlong bear channel and the bears want a 300 pip measured move down.
However, every new low in the bear trend over the past year reversed up within a few days. The bulls then got a 200 – 300 pip rally over the next few weeks.
I have mentioned this pattern after every strong rally and selloff for a year. While this will not go on forever, a trader will make more money betting on it continuing until it clearly has ended. Therefore, traders should expect a reversal up this week. It might come after Wednesday’s FOMC meeting.
It is important to note that while the odds favor a reversal, traders have to be prepared for a change in the price action. If there are consecutive bear bars closing on their lows and below the May low, the odds will shift in favor of at least a couple legs down and a stronger bear trend.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been in a 30 pip range overnight. It bounced in the past 30 minutes from just above yesterday’s low. Today’s high so far is below yesterday’s high. Consequently, today is still within yesterday’s range and is currently an inside day. Friday was also an inside day.
Consecutive inside days is an ii pattern, which is a breakout mode pattern. Because the daily chart is at major support and Wednesday’s meeting is an important catalyst, trader’s are neutral. The ii pattern reflects that. If today remains an inside day, today will be both a buy signal bar and a sell signal bar on the daily chart for tomorrow.
When there is a breakout mode pattern, traders know that there is about a 50% chance of a successful bull or bear breakout. Furthermore, they realize that there is a 50% chance that the 1st breakout up or down will reverse.
Today does not have to remain an inside day. But it is also the 4th day in a tight trading range. There will probably be sellers around Friday’s high and buyers below Friday’s low. Traders expect a continuation of the 4 day tight range and are looking for reversals to scalp today.
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 opened with a sell climax, but reversed up from the 60 minute EMA. It then entered a trading range. With lower highs and higher lows, it was a triangle. This is a Breakout Mode pattern.
Today was an inside day on the daily chart. It is a pause in a bull trend and therefore a buy signal bar on the daily chart. But there is an 8 day wedge rally. Traders also see today as a sell signal bar. The Emini will probably stay mostly sideways into Wednesday’s 11 am FOMC announcement on interest rates.
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.
