Emini and Forex Trading Update:
Monday July 8, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini closed at a new all-time high on the weekly chart last week. While it finally broke above my minimum target of 3000, it failed to close above it. On the daily chart, the rally from the June 12 low is in a tight bull channel and it has 3 legs. It is therefore a parabolic wedge buy climax.
But, the past 3 days had bull bodies. Traders want to see a bear bar and a micro double top before looking for a test down. Also, Friday closed above its midpoint. It is therefore a buy signal bar for today. But, it has a tail on top. That makes it a weak buy setup. Many bulls will take some profits above its high.
Also, the rally has stalled at the 3,000 Big Round Number. As a result, the bears will begin to sell with limit orders above the high of the prior bar. This, combined with some profit-taking by the bulls increases the chance of trading range trading for at least a couple days.
Can a parabolic wedge on the daily chart begin a bear trend? It often does, but when it does, The Emini typically goes sideways to down for 10 or more bars 1st. An abrupt reversal down would be rare. Consequently, the downside risk on the daily chart is small for at least a week or two.
Overnight Emini Globex trading
The Emini is down 7 points in the Globex session. Friday’s gap down and selloff was a Big Down move. The rally was a Big Up move. That creates Big Confusion and makes traders hesitate to bet on a big trend.
Instead, they expect the bulls to take profits on rallies and buy selloffs. Also, they know the odds favor bears selling rallies and taking profits around support. The result of both the bulls and bears buying low, selling high, and betting against big trends is usually a trading range.
Finally, I have mentioned several times over the past 2 weeks that there is a seasonally bullish tendency between June 26 and July 5. That window is now over. That further reduces the chance of a strong rally this week.
Friday’s setups
Here are several reasonable stop entry setups from Friday. 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 sold off again on Friday. The bears hope that their yearlong bear trend is resuming. They see the 6 week rally as a double top with the March 20 high.
However, the bulls have been making higher lows and highs for 6 weeks. The chart has been in a trading range for 5 months. The bears need a break below the May 23 52 week low to convince traders that the bear trend is still intact. Without that, traders will bet that the 2 week selloff is just a bear leg in the 5 month trading range.
The bears will look to take profits at support, like the June 18 major higher low. Also, the bulls see that the selloff is now in the bottom half of the range. They therefore will be more willing to buy. But, since the selloff is now close to the support of the June 18 major higher low, many bulls will wait to buy closer to that low. Many also prefer to buy with stop orders after a strong reversal up.
Since that 1.1181 low is important and nearby, this selloff probably will continue a little lower. If there is a strong break below, traders will expect a new 52 week low. At the moment, the selloff will probably reverse up from above the May 23 low.
Overnight EURUSD Forex trading
The 5 minute chart has been in 25 pip range overnight. In addition, today not break below Friday’s low, despite Friday’s strong selloff. Today so far is an inside day. That is bad follow-through after a bear breakout.
If today closes above its open, it will have a bull body on the daily chart. It would therefore be a buy signal bar for tomorrow.
The daily chart sold off for 2 weeks in a tight bear channel. Since that channel has had 3 legs, it is a parabolic wedge sell climax. That increases the chance that the selling will end this week around the June 18 low.
Day traders expect a trading range after a parabolic wedge sell climax down to support on the daily chart. That would be a Breakout Mode pattern.
Because of higher highs and lows for 6 weeks, the bulls will look for a reversal up at some point this week. However, sideways is more likely for at least a couple days. Consequently, day traders will be looking for 10 pip scalps today.
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 gapped down and entered a tight trading range. The bears have an expanding triangle top on the weekly chart, but no sell signal bar. They also have a parabolic wedge top on the daily chart. They probably will need a micro double top.
Traders see the 3 day tight trading range as a Breakout Mode pattern. But, even if the bears get a reversal down to the June 26 start of the parabolic wedge, the Emini would probably enter a trading range on the daily chart. The odds favor a test of the top of the expanding triangle within a month.
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.
Anyone have thoughts on shorting below 70 as a strong reversal bar ending a 2nd leg up from the wedge bottom 60 and double topping with 23? I took this and added on below 75 getting out BE on the first.
Thanks
Ok setup. But from the BL stanpoint open gap below 70 and BL W target wasn’t hit yet. Nice mgt of your trade.
Daniel
Thanks Daniel, good point with the open gap. I’m usually ok with strong 2nd leg moves so it was reasonable for me
I personally only like to enter on a DT, micro DT or W, after strong bars like 68, 69. But as Daniel said good management especially late in the day like that, you have to make quick decisions which it seemed like you did. Good job.
Thank you James. I tend to agree with that but since it was a 2nd leg, I’m usually ok with strong moves especially when it’s a trading range kind of day
Hi, Joshua, I have a question of your initial entry below 70, where is your initial stop? since after your entry below 70, the market rallied three bull bars. I actually limit short above H of 70 and got filled at 74 and out at 76. My planned stop was HOD. Thanks.
Hi Xiaoxiao, I put my stop slightly above 11 because the vast majority of days have either the session high or low set within the first 90 minutes of the session (16 or 18 bars I believe Al uses?). Since 4 was the low within that period and it broke, I was ok with assuming 11 would be the high for the day especially because it was a trading range day. 72 was a second leg and so if it did break 11’s high, it would be a clear wedge and I really didn’t see it breaking out above that. I was ok with adding on there. (I don’t have a rule of flattening at the session close.) With big stops like this I use the appropriate number of micro ES contracts. I love those things actually. I added on below 75 and even though 76 was disappointing, I was optimistic of prices reaching the 70 short entry again because in my mind it was a reasonable entry 🙂
Great trade, selling limit above 70 was really nice.
Hi Al,
I’m having some trouble with trade management. I’ve re-watched all the appropriate videos (31A-D, 36A/B, 51all, 52all) but I’m finding I’m still picking the wrong targets or getting out too soon.
Can you walk me through you thinking bar by bar for entering above 60. My initial target was the 50 High (approx 1R) and it felt appropriate after bar 61, but how would the ii (bar 62-63) change your thought process? I got out at +1Tick during bar 65. Thanks for your help.
Daniel
Hey Daniel, I’m not an expert but I too have struggled over the years with trade management. I too bought above 60 and got out with 2 points. You knew today was a trading range, so when I see lots of TR behaviour I scalp. Hence Al’s TR motto BLSHS. One thing you have to remember in TR is the market typically comes back to test your entry (BO area) so you could have held for a swing as you were buying the lower half of the TR, as it might have been part of a larger more complex move (TR market likes to move in 2’s) which it ultimately did. As well don’t forget when Al says you can take profit at 2 times actual risk. Also one thing that has help me tremendously is actually studying the scalping videos because Al talks about when it’s a good time to take a scalp opposed to hold for a swing. Just my 2 cents and Hope that helps.
Hi Daniel,
After a strong reversal bar at a wedge bottom (4-36-60) and (13-36-60) I think it makes sense to be on the lookout for 2 legs, especially with leg 2 starting with a test of the previous entry as James mentioned. I missed the 60 buy but I did see the two smaller legs down on 65 and 67 slamming into the 60 entry price but failing to go lower. After the strong bull bar 68, I did manage to buy above and got out on bar 70 near the high of 23. Looking back now, I think going for slightly above 23’s high also is reasonable.
I don’t think you did anything really wrong because the price action after 70 was kind of disappointing. But if you got out, as Al says, just buy again above a bull bar. Just my thoughts, hope it helps
Hi Daniel, I’m learning just like you. I see the ii as the bears deciding if they think this bull leg is going to fail to continue a broad bear channel or if the bulls will BO forming a TR day. When the bulls BO I assume bears are giving up – but it’s still a TR day. At that point I don’t think the big bear bar at 70 is a surprise because many bulls are taking scalping profits and many bears are getting out of their shorts believing in another bull leg and expecting a test of the open or high of the day.
Thanks Paul, Joshua, and James for the reply’s.
Daniel