Trading Update: Friday July 9, 2021
Emini pre-open market analysis
Emini daily chart
- Yesterday gapped down to below the open of the month, but rallied and closed near its high. Emini likely in developing trading range.
- There are 5 bull bars on the monthly chart and July will probably not be the sixth. Therefore, even if the Emini continues to rally, it will probably end the month below the open of the month.
- Yesterday is a High 1 buy signal bar for today, and the bull trend has been strong. But, the big tail on top makes it a weak buy signal bar.
- I have been saying for the past week that the Emini will probably be mostly sideways for a week or more after extreme buy climaxes on the daily and 60-minute chart. Therefore, traders should expect reversals every few days.
- Today will probably open back above the 60-minute EMA. The Emini might have to oscillate around it for several day after being above it for 70 bars, which is an extreme buy climax.
- Since a trading range is likely on the 60-minute and daily charts, traders should also expect disappointment. That reduces the chance that tomorrow will be a strong entry bar for the bulls.
- When the daily chart is in a trading range, the 5-minute chart tends to spend more time in trading ranges. There should be at least one swing up and one swing down today and either can come first.
- Everybody knows that the market has rallied for a long time without more than a 10% pullback. That is unusual. There should be a 15 – 20% pullback before the end of the year.
- Mid-July through mid-October is a common time for corrections. Did it begin yesterday? In a bull trend, the odds are that every bear day will be followed by a new high. The bears need several strong bear days before traders will conclude that the 15% correction has begun.
Emini 5-minute chart and what to expect today
- Emini is up 21 points in the overnight Globex session.
- It will probably open back above the 60-minute EMA.
- The streak of 70 consecutive bars above the EMA on the 60-minute charts was one of the most extreme buy climaxes on that chart in years. That increases the chance that the Emini will have to oscillate around it for several days.
- While yesterday is a buy signal bar on the daily chart, it had a big tail on top. That reduces the chance of a big bull trend day.
- Yesterday’s rally was strong enough to make a big bear day unlikely.
- Today will probably have at least one reversal and not be a big trend day.
- Since today is Friday, weekly support and resistance can be important, especially in the final hour.
- The bulls want the week to close above the open of the week. That would increase the chance of higher prices next week.
- It is more likely that the week will close in middle third and have a bear body. That would increase the chance of more sideways trading next week.
- While unlikely, the week will close near the low. That would increase the chance of lower prices next week.
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
- Reversed up yesterday from a wedge bottom near the bottom of the yearlong trading range.
- Wednesday was a buy signal bar, but it was a bear bar. This is a lower probability buy setup.
- Yesterday was the entry bar and it had a bull body, but it barely closed above Wednesday’s high and it had a big tail on top.
- Weak buy signal bar and entry bar so weak reversal up so far.
- Since June 18 sell climax, many bars with prominent tails and lots of reversals. This is trading range price action.
- Trading ranges have legs up and down so should bounce for a couple weeks soon.
- Today is Friday so weekly support and resistance can be important.
- The bears want the week to close below its midpoint. That would increase the chance of lower prices next week.
- The bulls want a bull body. This week would then be a buy signal bar for a micro double bottom and a test of the March 31 low.
- Since the weekly chart is in a trading range, traders should expect confusion. The week will probably close with a bear body and in the middle of its range.
- The more it closes near the high, the more likely next week will trade higher.
- Traders are deciding if the Wedge of June 18/July 2/July 7 is the end of the selling, or if there will be one more legs down next week, forming a bigger wedge. If the bulls get a strong rally today, the odds will favor a bounce for a couple weeks.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
- Bull Trend From The Open.
- Broke to new all-time high and then sideways for a couple hours.
- Then trend resumption up to top of 5-day expanding triangle.
- Since week closed near the high, increased chance of higher prices next week. Might gap up again on weekly chart.
- Next targets for bulls are measured move target at 4,404 and top of channel on daily chart, near 4,500.
- If reversal down early next week, then expanding triangle top over past 5 days. Easier to see on 60-minute chart.
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.
