Emini and Forex Trading Update:
Thursday July 25, 2019
I will update again at the end of the day.
Pre-Open market analysis
Yesterday rallied to another all-time high. It closed on its high after a strong rally and therefore there is an increased chance of a gap up today.
But since yesterday was a buy climax, there is only a 25% chance of a strong bull trend today lasting all day. There is a 75% chance of at least a couple of hours of sideways to down trading that begins by the end of the 2nd hour.
The wedge buy climax and last week’s big bear bars on the daily chart are still important influences, but less so after yesterday’s rally. Traders should still expect a pullback to around 2900 over the next few weeks. This is true even if this small breakout above the 4 week wedge bull channel lasts for a couple more days.
Overnight Emini Globex trading
The Emini is up 5 points in the Globex session. There will probably be a small gap up today. Small gaps typically close in the 1st hour. However, yesterday was surprisingly strong. This will reduce the chance of a bear trend day today. The best the bears can probably get is a trading range day.
If the bulls get a bull trend day after yesterday’s buy climax, it will likely not be a strong bull trend day. Day traders should expect a sideways to up day today with at least one swing down.
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 so far has a small break below the May 52 week low. This is a new low in the yearlong bear channel and the daily chart is now back in a bear trend.
The bears want consecutive closes below the May low. Furthermore, they want big bear bars closing near their lows. If they get that, traders will begin to look for a 300 pip measured move down after a break below the 5 month trading range.
However, there is a 60% chance that this breakout will be like all of the others over the past year. Each strong leg up and down reversed after a few weeks. Traders will therefore look for a reversal back up within a week or two. Next week’s FOMC report could be the catalyst for either a reversal up or the start of a measured move down.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart traded down from above yesterday’s high to below yesterday’s low. Additionally, the strong 60 pip reversal down also broke below the May 52 week low. However, it quickly reversed back up to above yesterday’s high. Today is therefore a bull trend reversal day.
Consequently, the overnight selloff might simply be a sell vacuum test of support. That increases the chance of a bull trend reversal on the daily chart within a few days. This selloff would then be like all of the other new lows over the past year. Every bear breakout failed.
Today’s close will be important. The bulls want the bear breakout to fail and reverse up from 1.11. They will try to get today to close above the open. Today would then have a bull body on the daily chart. They prefer to get today to close on its high and above yesterday’s high. Today would then be a stronger buy signal bar on the daily chart.
The bears want a 300 pip measured move down. They know the odds favor a reversal up within a week. While they want today to close below yesterday’s low and the May low, they believe that is now unlikely.
Alternatively, they want to weaken the reversal up. With the strong reversal up over the past 20 minutes, the best they probably will get today is a trading range and maybe a close below the open. The bulls now are in control of the 5 minute chart. Day traders will be more willing to buy selloffs than sell rallies.
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 reversed down to below yesterday’s low. Yesterday is now a double top with last week’s high. After a Spike and Channel down, the Emini entered a trading range and closed around the 60 minute EMA. It might continue sideways until next week’s FOMC report.
There is a parabolic wedge buy climax on the daily over the past month. Also, there have been many big bear bars over the past 2 weeks. The Emini is struggling to hold above 3,000. As a result, the Emini will probably pull back to 2900 – 2950 over the next few weeks. This is true even if it goes a little higher first.
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.
