Emini and Forex Trading Update:
Thursday July 11, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini gapped up and rallied to a new high yesterday. It then sold off to a new low, but the gap stayed open. It reversed up and entered a trading range. By closing near the middle, yesterday was a doji bar on the daily chart.
The bears wanted a big bear bar closing near its low. This is because there is a parabolic wedge rally over the past 6 weeks. That is a buy climax and it therefore typically attracts profit-taking by the bulls. But many bulls will not take profits until they see a strong sell signal bar. Yesterday was not good enough. Consequently, the odds continue to favor sideways to up.
Overnight Emini Globex trading
The Emini is up 4 points in the Globex session. Yesterday was a big trading range day and today will probably open within yesterday’s range. There is an increased chance that today will mostly overlap yesterday’s range and possibly be an inside day.
Whenever the market breaks to a new all-time high, traders wonder if the breakout will succeed or fail. If it succeeds, it can begin to form a series of bull trend days. If it fails, it can form a series of bear trend days.
The 1st day or two of either trend can be big. Day traders are therefore ready for a strong trend up or down.
However, they know that the Emini has had mostly trading range price action for a couple weeks. Day traders therefore expect at least one reversal every day. The daily ranges have been big enough for at least one swing up and one swing down on most days. That will probably be true again today.
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 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 reversing up from a double bottom with the June 18 low. The double bottom is a pullback from a reversal up from the May 30 low. This is a double bottom higher low major trend reversal.
All major trend reversal bottoms have a 40% chance of actually becoming a bull trend. Most lead to a leg in the trading range and then the trading range or bear trend continues.
This is the strongest setup that the bulls have had in a year. There is now more than a 50% chance of a break above the March high within 2 months. Furthermore, there is a 40% chance of a test of the January high or even the September high over the next many months.
The bears want the 2 day rally to stall at around a 50% bounce. They then want a reversal down from a lower high. That would be the right shoulder of a head and shoulders top bear flag where the June 12 high was the left shoulder.
But even if they get a breakout below the May low, the odds are that it will fail, like every other bear breakout over the past year. The chart has been in a trading range for 5 months, and most legs up and down reverse. Traders continue will to bet on reversals until there is a clear trend.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been in a 25 pip trading range over the past 6 hours. The bulls want today to close near its high. Today would then be the 2nd consecutive strong bull day on the daily chart. That would increase the chance that a bull trend is underway.
The bears want this 2 rally to fail. They therefore will try to get today to close near its low. Today then would be a sell signal bar on the daily chart for a head and shoulders top bear flag. Since the 3 week selloff was in a tight bear channel, the odds are that there will be a lower high and at least a small test down within a week.
Because the overnight range has been small, day traders have been scalping. The bears do not need a big bear day. They will be happy with the day simply closing near its low. That would create a good sell signal bar on the daily chart for tomorrow.
The bulls, however, would like another bull trend day. So far, the day is a trading range day, and it will probably continue that way.
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 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 had several legs up and down, and it closed again near the open. This is the 4th doji day in the past 5 days. These are neutral bars and therefore the breakout above 3,000 so far is weak.
However, the bears have not yet formed a credible sell signal bar for their parabolic wedge rally. But, they probably will get a decent bear sell signal bar within a week. That will probably lead to a pullback lasting a couple weeks.
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.
