Emini and Forex Trading Update:
Wednesday July 17, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini sold off yesterday. Traders are deciding if this is the start of a 2 – 3 week pullback. Because the daily chart has a parabolic wedge top, the odds favor a couple small legs down over the next few weeks. The targets are the bottoms of the pullbacks in the wedge bull channel. That is around 2950 or 2900.
Since Monday’s candlestick had a tail below, it is a low probability sell signal bar. There might be more buyers than sellers below its low. The bears will need 2 – 3 consecutive bear days to convince traders that the pullback has begun.
Monday’s high was exactly at the open. It was therefore never tested. That makes it a magnet above. Many traders want to see at least a small break above Monday’s high and then a reversal down before looking to sell. However, if the bears get a couple big bear days without that test, traders will conclude that the pullback has begun.
Overnight Emini Globex trading
The Emini is up 1 point in the Globex session. Yesterday ended with a 4 hour trading range. Today will probably open within that range. If the bulls can hold above yesterday’s low, they will have a double bottom pullback. That is a buy setup and it often leads to a bull trend.
The bears want a break below yesterday’s double bottom. They then want a measured move down to below the 3,000 Big Round Number. They hope that the month-long parabolic wedge bull channel is finally reversing.
While it will likely begin to reverse down within the next 2 weeks, the bears need strong follow-through selling after yesterday’s bear day. If the Emini begins to fall, more traders will conclude that the 2 – 3 week pullback has begun. The bulls will begin to take profits and the bears will sell. There is therefore an increased chance of a bear trend day 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 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 has been in a trading range for 5 months. A trading range always has reasonable buy and sell setups. After the 1st break above the 20 week EMA and bear trend line on the weekly chart (not shown), the EURUSD Forex market is currently slightly more likely to rally to above the June high than sell off to below the May low.
But a trading range is a Breakout Mode pattern. The probability of a bull breakout is always just about the same as for a bear breakout. Furthermore, the 1st breakout up or down fails 50% of the time.
The bulls are trying to form a reversal up from the June 18/July 9 double bottom. They want a bull bar closing near its high today or tomorrow. That would attract buyers and increase the chance of a swing up over the next few weeks.
If the bears get below the June 18 higher low by even a few pips, the bull case would be slightly weaker. But they need a strong break below the May low to convince traders that the yearlong bear trend is still intact.
Overnight EURUSD Forex trading
The EURUSD 5 minute chart has been in a 20 pip range overnight. Traders are deciding if yesterday was simply a test of the July 9 low or a resumption of the bear trend.
All the bulls need to do today is to have the day close above its open. They want a bull body on the daily chart. Today would then be a buy signal bar for tomorrow. The buy setup would be stronger if today closed near its high. Consequently, the bulls will buy 10 – 20 pip selloffs today. Since they do not need a big bull day, they will scalp.
The bears want a break below last week’s low. They will sell rallies. Also, they would like a big bear trend day closing far below the July 9 low. With so little energy so far today, they will probably not achieve their goal. Instead, they might try to simply thwart the bulls. The bears will sell rallies for scalps and try to get today to close below its open. That will prevent a strong buy signal bar on the daily chart.
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
The Emini sold off on the open and then channeled down. It closed near the low. There is now a 60% chance that the Emini has begun its 2 – 3 week pullback begins.
Last week’s low is only about 20 points below. The bears want this week to trade below last week’s low. Since it reversed down from above last week’s high, this week would then be an outside down week. That would be a stronger sell signal bar for next week.
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.
