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Emini Bears Need Major Trend Reversal

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Trading Update: Tuesday July 23, 2024

S&P Emini pre-open market analysis

Emini daily chart

  • The Emini rallied yesterday and found support below the moving average. This was expected due to the tight bull channel on the daily chart.
  • The odds favor the bears getting a second leg down, but they must be prepared for a possible deep pullback and the formation of a lower-high major trend reversal.
  • As strong as the selloff was last week, it is only 3 bars, increasing the odds of it being a minor reversal that will lead to a trading range.
  • There are trapped bulls who are disappointed with last week’s selloff. They will likely use and bounce to sell out of longs, leading to a 2nd leg down.
  • Yesterday is a strong enough bar at support, and the bulls will likely get a small 2nd leg up. However, the odds favor lower prices.
  • Overall, last week’s selloff is strong enough to increase the odds of the bears getting a second leg down. Traders will pay attention to how much buying pressure the bulls can get during the pullback.

Emini 5-minute chart and what to expect today

  • The bulls formed a tight bull channel on the 15-minute chart during the early morning hours and got a 2nd leg on the open of the U.S. Session.
  • While the bulls did a good job with the first 3 bars of the day, the context was bad, and the follow-through had too much overlap. This is how the market is trying to get a selloff after bar 12.
  • Today will probably have limited buying due to the odds of the daily chart getting a bad follow-through bar for the bulls. This means that traders should pay attention to the open of the day, as the bears will want a close below it.
  • Overall, today will likely have a lot of trading range price action.
  • As of bar 16, the bears are trying to get a test of the bar 1 low.

Yesterday’s Emini setups

SP500 Emini 5-Minute Chart Double Bottom after Failed Double Top Then Tight Trading Range

Al created the SP500 Emini charts.

Here are reasonable stop entry setups from yesterday. I show each buy entry bar with a green arrow and each sell entry bar with a red arrow. Buyers of both the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a near 4-year library of more detailed explanations of swing trade setups (see Online Course/BTC Daily Setups). Encyclopedia members get current daily charts added to Encyclopedia.

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

  • The EURUSD formed a bad High 1 buy signal bar on July 22nd, following 2 consecutive bear bars.
  • This increased the risk of sellers above the July 22nd high and a 2nd leg down, which is what happened today (July 23rd).
  • While the July rally has been good for the bulls, it is within an overall trading range on the daily chart.
  • In general, when you get a rally with consecutive buy climaxes, such as the one leading up to the July 17th high, traders are hesitant to buy.
  • The risk/reward gets bad, and the probability does not justify having the bad risk/reward. This means that traders will begin to sell out of longs, and bears will establish shorts.
  • The rally up to the July high is likely strong enough for a 2nd leg up. However, the pullback is becoming deeper than what the bulls want. This is because the market is in an overall trading range.
  • At the moment, the selloff over the past four days is strong enough that there are probably sellers around the July high, and the market will continue to go sideways.

Summary of today’s S&P Emini price action

SP500 Emini 5-Minute Chart Wedge Top and Then Trading Range

Al created the SP500 Emini charts.

End of day video review

End Of Day Review will be presented in the Trading Room today. See below for details on how to sign up.

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

Al Brooks and other presenters talk about the detailed Emini price action real-time each day in the BrooksPriceAction.com trading room days. We offer a 2 day free trial.

Charts use Pacific Time

When times are mentioned, it is USA Pacific Time. The Emini day session charts begin at 6:30 am PT and end 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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