Emini weekly sell signal might form late July

Trading Update: Friday July 16, 2021

Emini pre-open market analysis

Emini daily chart

• Yesterday sold off from a test of the open of the week and traded below Wednesday’s low. This triggered a micro double top sell signal just below the 4,404 measured move target. A potential weekly sell signal setting up.
• However, yesterday closed in the middle of its range with only a small bear body. That is a weak sell signal bar.
• Furthermore, yesterday’s low was exactly a 50% retracement of last week’s rally.
• Traders still expect a test of the 4,404 measured move target and the 4,400 Big Round Number before the Emini falls much further.
• Today is Friday and this week so far is a small bear reversal bar.
• The more the week closes on the low, the more likely next week will trade lower.
• If the week closes in the middle or with a bull body, next week will probably be sideways to up.
• I have been saying that July should end up with a bear body on the monthly chart. This is because there are 5 consecutive bull bars and there have not been 6 in 10 years. The odds are slightly against July being the sixth.
• The open of the month is 4,294. That is a magnet at the end of the month.

Emini 5-minute chart and what to expect today

• Emini is up 10+ points in the overnight Globex session.
• This week has had 4 trading range days. That increase the chance of another trading range day. That means there will probably be at least one swing up and one swing down, which means at least one reversal.
• Today is Friday and therefore weekly support and resistance can be important, especially in the final hour.
• The Emini has been oscillating all week around the open of the week. If this week is a bull bar on the weekly chart, traders will expect higher prices next week.
• If this week is a bear bar, it will be a sell signal bar on the weekly chart. The bigger the bear body and the more the week closes on its low, the more likely the Emini will trade down next week.

Yesterday’s Emini 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. Buyers of both the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).

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. These therefore are swing entries.

It is important to understand that most swing setups do not lead to swing trades. As soon as traders are disappointed, many exit. Those who exit prefer to get out with a small profit (scalp), but often have to exit with a small loss.

If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.

EURUSD Forex market trading strategies

EURUSD Forex daily chart

• Since June 18, there have been many overlapping and sideways bars, prominent tails, and many reversals. That looks more like a bear leg in what will become a trading range than a bear trend that will continue much lower.
• The EURUSD Forex market has been in a bear channel since June 25. There is also a double bottom with the July 7 low. But until there are consecutive big bull bars, traders will continue to expect lower prices.
• Targets for the bears are a measured move down from May/June trading range, the March 31 low, and the November 4 bottom of the yearlong trading range.
• Triggered a double bottom buy signal yesterday when it traded above Wednesday’s high.
• However, yesterday then sold off and closed below its midpoint. It is a weak sell signal bar.
• The bears want the selloff to continue to below bottom of the yearlong trading range.
• Although yesterday is a sell signal bar, the EURUSD has been in a small trading range for 10 days and the signal bar is weak. There is both a double top and a double bottom. This is Breakout Mode.
• Because the trading range is in a bear trend, the bears have a slightly greater chance of a breakout below.

Summary of today’s S&P Emini futures price action and what to expect tomorrow

End of day summary

• Sold off from above yesterday’s high to below its low so outside down day.
• Weekly chart formed bear bar closing near its low so sell signal bar on weekly chart.
• Month probably will have bear body so Emini should be lower by end of month.
• Is this the start of a 15% correction? There have been many reversals over the past year and every one led to a new high. Traders will continue to buy 1- to 3-day selloffs, betting on a resumption of the bull trend.
• The bears need a strong selloff or a bear bar on the monthly chart before traders will look for a 15 – 20% correction. Remember, July will probably be a bear bar, and if it is, the Emini will probably fall at least 15% over the following 2 months.

See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.

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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.

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Charts use Pacific Time

When I mention time, it is USA Pacific Time. The Emini day session opens at 6:30 am PT, and closes at 1:15 pm PT, which is 15 minutes after the NYSE closes. You can read background information on the market reports on the Market Update page.

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