Emini and Forex Trading Update:
Wednesday July 15, 2020
I will update again at the end of the day.
Pre-Open market analysis
Yesterday triggered a sell signal on the daily chart by going below Monday’s low. However, yesterday rallied in a bull trend and it closed near its high. It erased Monday’s bearishness and it is a High 1 bull flag buy signal bar for today on the daily chart.
I have been talking about the February 24 big gap down on both the daily and weekly charts since it formed. For the past 2 months, I said that the rally would probably have to test into the gap before the bears can get a correction back to the middle of the 3 year trading range.
Over the past month, the bears have made several attempts to reverse down from below that gap. Yesterday significantly increased the odds that the rally will reach that gap within a couple weeks.
Overnight Emini Globex trading
The Emini is up 45 points in the Globex session. It will therefore have a big gap up. In fact, it might gap above the June high. It is currently only 10 points below the gap above the February 24 high. Traders expect it to enter that gap today.
There is an increased chance of a trend day when there is a big gap up. A bull trend is slightly more likely than a bear trend.
When there is a big gap up on the 5 minute chart, the Emini is far above the EMA. That is its recent average price. Many traders do not want to pay a price that is far above average unless the early bars are far above average in their bullishness.
When there is a big gap up or down, there is only a 20% chance of a strong trend up or down from the 1st bar. Much more often, the Emini enters a trading range for an hour or two. The bears look for a wedge rally or a double top and then a reversal down.
The bulls want the Emini to go sideways or down to around the EMA. They then look to buy a reversal up from a double bottom or a wedge bottom for a swing up.
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. I do not want the lines to be distracting. If they are longer, I make them dotted. But, they have to be visible, so I make the shorter ones solid. 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 (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.
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
The EURUSD Forex market on the daily chart is rallying for a 3rd consecutive day. It is breaking above a month-long bull flag and it is now testing the March 9 high. That is the top of a yearlong trading range. If the bulls can get consecutive closes above that high, traders will conclude that the 2 year bear trend has ended.
The bears want a double top with the March 9 high. After 3 bull days closing near their highs (if today closes near its high), they will probably need a micro double top in addition to the double top. Therefore, traders expect The EURUSD to go at least a little more sideways to up this week.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market rallied in a Bull Trending Trading Range pattern today. There was a trading range early overnight, a bull breakout, and now another trading range. This is the weakest type of bull trend because the chart is mostly sideways with only a brief rally in between 2 trading ranges.
Since the EURUSD has been in the upper trading range for several hours, day traders are scalping small reversals up and down. However, the day is still in a bull trend. Consequently, the bulls have a slightly better probability of making money.
The bears want a reversal down. If today closes on its low, traders will conclude that the break above the June high will probably fail. At a minimum, they want today to close off its high and below the June 10 high. If they get that, they will have a better chance of getting a reversal down within a few days. At the moment, traders expect a test of the March high within 2 weeks.
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. I do not want the lines to be distracting. If they are longer, I make them dotted. But, they have to be visible, so I make the shorter ones solid. 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 (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.
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.
End of day summary
The Emini opened with a big gap up on the daily chart and triggered the High 1 bull flag buy signal. After a Low 2 top, it sold of to just below yesterday’s high, closing today’s gap up. It then rallied back to just below the open of the day. Today was a trading range day.
The February 24 gap on the weekly chart is an important magnet above. The Emini got within 9 points today. It should get there within a week, even if there is a day or two pullback first.
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 Market Update page.
