Emini and Forex Trading Update:
Tuesday July 16, 2019
I will update again at the end of the day.
Pre-Open market analysis
Yesterday sold off on the 1st bar after gapping up to a new all-time high. But, the bear channel on the 5 minute chart was not strong. In the middle of the day, the bulls got a reversal back up to the middle of yesterday’s range.
Since yesterday had a bear body on the daily chart, it is a sell signal bar for today. Over the past month, the daily chart has had 4 legs up in a tight bull channel. That is a parabolic wedge buy climax. Now the bears finally have a sell signal bar.
But the bar had a prominent tail below and the last 5 days have been strong. The chart will likely have to go sideways and form a micro double top before the bears can begin a 1 – 3 week pullback.
Today might trade below yesterday’s low, which would trigger the daily sell signal. Traders want to know if the bulls will finally take profits. More likely, the Emini will go sideways for a few days before deciding whether the bears will finally get a small pullback.
The weekly chart has a 7 bar bull micro channel. While the odds favor a pullback beginning within 2 weeks, it will probably only last 1 – 3 weeks.
Overnight Emini Globex trading
The Emini is up 1 point in the Globex session. Yesterday’s high was also its open. That open was therefore not tested and it is now a magnet for today or tomorrow.
Yesterday’s low was a 5 bar tight trading range with 4 bars having identical lows. That ledge bottom, too, is a magnet.
Traders want to test both yesterday’s high and low at some point this week. Also, yesterday’s dominant bear bar on the open might continue its domination for another day or two. There is therefore an increased chance of a test below yesterday’s low.
With magnets above and below, the Emini will probably be sideways again today and maybe tomorrow. However, there is still no strong top on the daily chart. Traders continue to expect at least slightly higher prices.
Finally, it is important to remember that bull trends on the daily chart have an increased chance of rallies in the final hour.
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 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 is turning down from a lower high. I said last week that this was likely. The 3 week bear channel was tight. Consequently, the 1st rally was likely to be minor. That means traders expected a test of the low of the selloff.
The bears see this lower high as the right shoulder of a head and shoulders top. The June 12 high is the left shoulder. However, the pattern is in a trading range and most breakouts fail. Consequently, there will probably be a reversal up from either the June or May lows.
On the weekly chart, the June rally was the strongest one in a year. It broke above the bear trend line and the 20 week EMA. It is likely to have at least a small 2nd leg sideways to up. Therefore, this selloff will probably not lead to a resumption of the yearlong bear trend. Instead, traders see it as a bear leg in the 5 month trading range. But if the bears get consecutive closes below the May low, they will conclude that the bear trend has resumed.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart sold off 50 pips in a tight bear channel overnight. Traders have only been selling. Once the selling stops and the chart begins to go sideways, the bulls will begin to buy for scalps. However, it will be easier to make money as a bear today and tomorrow.
When a channel is tight, there is much less chance of a bull trend reversal. This is because it is a Bear Surprise Bar on a higher time frame chart, like the 60 minute chart. A surprise typically has at least a small 2nd leg sideways to down.
Also, there is still room to the June 9 low, which is last week’s low. I said yesterday that the buy signal bar on the weekly chart was small. There was consequently a 50% chance of the buy signal failing and of the bulls getting a 2nd buy signal within a couple weeks. That is still true. Even though yesterday did not go above last week’s high, last week’s low is about 20 pips below the overnight low. It is a target for the rest of this week.
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
By trading below yesterday’s low, the Emini triggered a sell signal on the daily chart. But yesterday had a prominent tail below. That lowers the probability of a 2 – 3 week pullback.
Furthermore, yesterday’s high was also its open. It therefore was not tested and it is a magnet above. Consequently, it is still more likely that the Emini will have to test yesterday’s high before the bears will get their 2 – 3 week pullback.
However, if the bears get 2 – 3 bear bars over the next few days, traders will conclude that the pullback has begun.
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.
