Emini and Forex Trading Update:
Wednesday July 24, 2019
I will update again at the end of the day.
Pre-Open market analysis
Monday was a bull inside day on the daily chart and a buy signal bar. Yesterday gapped up and triggered the buy. But last week’s 2 big bear bars and the month-long wedge buy climax are the dominant feature on the daily chart. The odds favor a 2 – 3 week pullback to 2900 – 2950, even if there is a brief new high first. Unless the bulls break strongly above Friday’s highs, traders will sell this rally.
Next Wednesday’s FOMC meeting is unusually important. Consequently, the Emini might not break out of the 4 week trading range until after the announcement. The past 2 days were trading range days. That further increases the chance of mostly trading range price action again today.
Overnight Emini Globex trading
The Emini is down 6 points in the Globex session. The 2 day rally on the 5 minute chart has had many bars with prominent tails and many small bars. In addition, it has spent a lot of time going sideways. This price action is more typical of a bull leg in a trading range and not the start of a bull trend.
As a result, traders expect it to lead to a bear leg in the 4 week trading range within the next few days. Because a test of around 2900 is likely within a few weeks, the upcoming selloff will probably have several big bear days.
This can begin at any time. With next week’s FOMC meeting being important, the Emini might wait until then before breaking out up or down. Traders will expect mostly trading range price action around 3000 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 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 below the neck line of a head and shoulders top yesterday. But the bulls see the past 2 days as a test of the April/May double bottom. If today begins a reversal up, the 5 week selloff would be a Double Bottom Pullback. That is a buy signal.
Even if the bears get a break below the double bottom, it will probably fail. Look back over the past year. There have been many new lows in the bear channel. Each one reversed up within a few days. There is no reason to believe that this one will be different.
Consequently, traders expect a reversal up from around the current level. All financial markets might wait for next week’s FOMC announcement before making a big move up or down.
Overnight EURUSD Forex trading
The EURUSD 5 minute chart sold off 30 pips overnight and reversed up over the past 6 hours. Today is the follow-through day after yesterday’s break below the neck line of a month-long head and shoulders top. If the bears get a bear body, especially one closing near its low, they will have a better chance of breaking below the May 52 week low. On the other hand, if the bulls get a bull body, especially one with a big body and a close near the high, today will be a buy signal bar on the daily chart. The bulls would see the 6 week selloff as simply a test of the April/May double bottom.
Today’s close is important. The bulls will buy 20 pip selloffs to try to get today to close above the open and near the high of the day. Since the bears want a bear body on the daily chart, they will sell rallies to above the open of the day.
Because the overnight range has been small, today will probably close around the open and have a small bull or bear body. The “big” move down and the reversal up were only 30 pips. Today therefore will probably continue with a small range with bulls buying selloffs and bear selling rallies.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
I will post chart after the close.
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 began with a Bull Trend From The Open, but then entered a trading range. The bulls got trend resumption up and then a Small Pullback Bull Trend for the rest of the day. They made a new all-time high just before the close.
Because of today’s strong rally and strong close, tomorrow might gap up. However, the day after a buy climax has a 75% chance of at least a couple of hours of sideways to down trading beginning by the end of the 2nd hour.
Last week’s big bear bars and the 4 week wedge buy climax are still important influences, but less so after today. Traders should expect a test of 2900 over the next few weeks even if the rally to a new high continues a little longer.
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.
Thanks for your daily comments. For EURUSD, before FOMC next week, ECB is coming tomorrow.