Emini and Forex Trading Update:
Monday July 6, 2020
I will update again at the end of the day.
Pre-Open market analysis
June was the 3rd consecutive bull bar on the monthly chart. But since it has a small body, it was a doji bar. That represents a loss of momentum. It lowers the probability of a strong rally in July.
On the weekly chart, last week was an outside up bar in a bull trend. It is therefore a buy signal bar for this week. Traders expect higher prices at some point this week.
On the daily chart, last week’s rally was strong. Traders expect at least a test of Thursday’s high today and probably a test of the February 24 gap soon.
The bears want a reversal down today from around Thursday’s high. There would then be a micro double top and a double top with the June 19 high. Traders would then look for a test of the June 15 low. But, the bull case is stronger.
Possible 4 month island bottom on the weekly chart
If today gaps above last week’s high, there will be a gap up on the weekly chart. Remember, there was a gap down on the weekly chart on February 24. A gap up today will create a 4 month island bottom since that February gap down.
The bulls will want a measured move up based on the 1,000 point height of the island bottom. That is unlikely, and it would probably take a couple years.
Most island tops and bottoms are minor reversal patterns. Therefore, it is more likely that the gap up will close at some point this year because that is what usually happens to gaps in trading ranges.
Overnight Emini Globex trading
The Emini is up 39 points in the Globex session. Today therefore might gap above last week’s high. This would be a gap up on the weekly chart and create a 4 month island bottom.
The bears want the gap up to fail in the 1st hour. They would like a strong selloff from the open and then a bear trend day. Today would then be a failed breakout above the June 19/July 2 double top. Traders would then expect a test of the June low. They have a 40% chance of success.
The daily, weekly, and monthly charts are bullish. It is therefore more likely that today will either be a bull trend day or at least a trading range day. Because of the possible island bottom on the weekly chart and the break above the 3 week tight trading range, there is an increased chance of a big bull trend day day.
Thursday’s setups
Here are several reasonable stop entry setups from last Thursday. 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 has been in a bull trend since the March low. Today so far is a big bull bar closing near its high. It is breaking far above last week’s high and the bear trend line at the top of the triangle. If today closes near the high if the day, traders will expect a test of the June high.
I mentioned over the weekend that there was an ii on the weekly chart. I also said that there would probably be a breakout above or below this week. Today is a breakout above.
Also, every market is always in some kind of a channel. Since the EURUSD is in a bull trend, it is in a bull channel. If the EURUSD continues up this week, traders will expect the rally to reach the top of the wedge bull channel based on the March 27 and June 10 highs. That would require a break above the June high and it would be the highest price in over a year.
It is important to remember that the EURUSD is still in the June trading range. As long as it is in a trading range, the probabilities are never as high as they might appear. While today so far is good for the bulls, if it ends with a big tail on top, like June 23, traders will begin to think that today might just be a test of the June 16/June 23 double top and not of the June 10 high.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market has rallied in a tight bull channel overnight to far above Friday’s high. Day traders are only buying and they have been swing trading and scalping.
At some point, they will start to take profits. This will convert the bull trend into at least a small trading range. If the height of the range grows to about 30 pips, some day traders will begin to sell for scalps. Also, they will switch from buying at the market to buying 10 – 20 pip pullbacks.
However, unless there is a reversal down of 50 or more pips, which is unlikely, it will continue to be easier to make money as a bull.
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 gapped above last week’s high, but the gap was small. Small gaps typically close in the 1st hour, and this one did. The Emini then entered a 6 hour triangle. The bulls got a breakout at the end of the day.
The bears want a 2nd failed breakout above the 3 week range. They will try to create a bear sell signal bar for tomorrow.
However, at the moment, traders believe that the Emini will test into the gap above the February 24 high before reversing down. They will probably buy the 1st 1 – 2 day pullback, unless there is a surprisingly big reversal day down.
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.
