Emini and Forex Trading Update:
Friday August 2, 2019
I will update again at the end of the day.
Pre-Open market analysis
After Wednesday’s big bear trend day, yesterday rallied strongly and it erased most of the selloff. However, it then sold of sharply after a Leg 1 = Leg 2 measured move up to Wednesday’s sell climax high. It fell below the low of the day, yesterday’s low, last month’s low, and my minimum target of 2950.
I have been saying for 2 weeks that there would be at least a 2 – 3 pullback on the weekly chart within a few weeks. This is because there was a wedge top on the daily chart. Furthermore, the 8 bar bull micro channel on the weekly chart was unsustainable. This week fell below last week’s low and it therefore ended the micro channel. The pullback has begun.
Can the bull trend resume up from here? I still think more sideways to down is likely because the bull channel on the weekly chart has not been strong for several weeks. While the Emini might go sideways for more days, the odds favor a test of 2900 within a couple weeks.
On the monthly chart, July is a minor sell signal bar. The Emini was likely to test below the July low in August, and it did yesterday. But after July triggered the monthly oo buy signal, there is a 60% chance of sideways to up trading for 3 months. Consequently, there will probably be buyers not far below the July low.
Today is Friday and therefore weekly support and resistance are important. The bears want this week to close below last week’s low. They also want it to close below the July 18 low, which is the neck line of the double top on the daily chart. The bulls always want the opposite. They would also like the week to close above 3,000, but that is probably too far above. These prices will be magnets today, especially in the final hour.
Overnight Emini Globex trading
The Emini is down 13 points in the Globex session. It might gap down on the open today.
However, yesterday’s late trading range came after a sell climax. Consequently, it will probably be a Final Bear Flag. That means that day traders expect that a gap down below yesterday’s low will not lead to a big bear trend today. Instead, they will look for a reversal back up into yesterday’s trading range.
The Emini oscillated around 2950 for 2 hours yesterday. Day traders therefore see that as a fair price. If today trades below it, they might see the price as unfairly low. That could attract buyers and lead to a move back to yesterday’s trading range.
Since the 8 week bull micro channel on the weekly chart is a sign of strong bulls, the bulls might try to show today that they are still willing to buy. Day traders know that today might rally and the week could close back above last week’s low of 2975.75.
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 broke to a new 52-week low in a yearlong bear channel. The selloff is also from a head and shoulders top. The minimum goal for the bears is a test of the 1.0950 measured move down and the 1.10 Big Round Number.
Yesterday was a disappointing day for the bears. It was the follow-through day after Wednesday’s big bear breakout. But it had a bull body and closed near its high. It is therefore a buy signal bar.
This makes traders wonder if the breakout will fail, like every other bear breakout over the past year. The bears need the next few days to stall and become a bear flag. They then need some bear bars. Without that, the breakout will fail.
The bulls see yesterday as a sign that the breakout is failing. It is a buy signal bar for the bulls. They have a wedge bottom over the past month and an expanding triangle bottom since April.
But they need a strong reversal up. Most prior reversals up over the past year came from either a micro double bottom or a double bottom. Consequently, if the bulls do not get a strong reversal up today or Monday, they will then likely need a test of yesterday’s low before they can begin a swing up. Their target is the start of the wedge a the July 11/July 19 double top.
Overnight EURUSD Forex trading
The EURUSD 5 minute chart rallied 45 pips overnight. By breaking above yesterday’s high, the bulls triggered a buy signal on the daily chart.
But the bull body so far is small on the daily chart. If the bulls can get a strong trend today, traders will conclude that the bear breakout will fail.
However, the 5 minute chart had a buy climax 5 hours ago. It has been in a 20 pip range since then. It is hovering around yesterday’s high and just above today’s open. This is trading range price action and it makes a trading range likely today.
At a minimum, the bulls will buy selloffs and try to get today to close above the open. That would create a bull body on the daily chart. They would like today to close above yesterday’s high and on the high of the day. They know that a big bull trend today is now unlikely.
The bears hope that the rally from yesterday’s low is simply a pullback in a bear trend on the daily chart. If they can get today to close near its low, today would be a credible Low 1 bear flag sell signal bar on the daily chart.
The 2 day reversal up is strong enough to lower the probability for the bears. That means traders are now uncertain. Confusion usually results in a trading range for at least a day or two.
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 again today but reversed up at the June 26 low. That was the bottom of the wedge bull channel and a target for the bears after the wedge top. The Emini then entered a trading range.
I have been saying for 3 weeks that 2900 was a reasonable target. It is close enough to have the Emini within its gravitational pull. It will probably be tested next week. Because the selling has been extreme, the bears will begin to take some profits. This should create at least a 1 – 2 day bounce next week.
This week formed a surprisingly big bear bar on the weekly chart. Traders will expect at least a small leg sideways to down after the 1st 3 – 5 day bounce. Since the selling has been exceptional, it might continue down to the June low below 2750 before the bulls return.
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.
