Emini and Forex Trading Update:
Tuesday July 9, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini gapped down and formed a small trading range day yesterday after Friday’s bull reversal day. Big Down, Big Up creates Big Confusion. Yesterday’s trading range was the result.
The bulls are struggling to get far above 3,000. The bears want an expanding triangle top on the weekly chart. However, last week was a bull bar on the weekly chart. It is therefore a weak sell signal bar. Consequently, there will probably be more buyers than sellers below its low.
There is a parabolic wedge on the daily chart, but the bears do not have a good sell signal bar. They therefore need either a micro double top or a surprise bar down. Since they have neither, the Emini will probably be sideways again today.
Overnight Emini Globex trading
The Emini is down 10 points in the Globex session. The daily chart does not have a strong bear sell signal bar or micro double top. This 3 day selloff is therefore more likely a pullback from the 3000 Big Round Number than the start of a swing down.
Look at the day sessions over the past 2 days. There were gaps down on the open, but the price action after the gap down openings was not bearish. Friday was a bull trend reversal day and yesterday was a trading range day. This is not how bear trends on the daily chart typically begin.
Yes, there can be a surprisingly big bear day at any point and that could be the start of a bigger selloff on the daily chart. Without that, day traders assume that the bulls will come back soon. They know that the odds favor another test of 3,000 within a couple weeks.
So far, this selloff is simply a test of the September/May double top. The lack of momentum down on the 5 minute chart reduces the chance of a big bear day today.
However, there is no bottom yet and the gap below the July 1 low is a magnet below. That is only about 10 points lower than today’s Globex low. The bulls might wait for a test of 2950 before buying again. If the selloff gets there today, day traders will look for a reversal up.
After 2 days of trading range price action, traders expect more of it today.
EURUSD Forex market trading strategies
The EURUSD daily Forex chart has been in a trading range for 5 months. Most of the legs up and down lasted 2 – 3 weeks. This 2 week selloff is now testing a major higher low in the bottom half of the range. Consequently, the bulls will probably begin a bull leg within a week.
Most of the down legs have required a micro double bottom before a bull leg began. Also, the bull legs typically ended with a micro double top. Therefore, traders expect that the chart will have to stop going down and begin to go sideways for a few days before it can go up.
It is in the buy zone since it is near support. Furthermore, there have been 3 legs down in a 7 day bear channel micro channel. This is a parabolic wedge sell climax. As a result, traders will begin to transition from selling to buying over the next few days. This is true even if the bears get a brief breakout below the May 23 52-week low 1st.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been in a 25 pip range overnight. This follows yesterday’s small day. The bears are probably exhausted. They will likely not want to sell aggressively here after an 8 day micro channel and parabolic wedge channel at support. Traders expect limited downside this week.
The bulls will begin to look for buy setups that will lead to at least a 50 pip rally today or tomorrow. Until they see one, they will scalp for 10 – 20 pips.
Traders expect a bottoming process this week. They would then look for at least a 50% retracement of the selloff, which means a test above 1.13 within a couple weeks.
The selling is drying up. But the chart will likely need another day or so of sideways trading before the bulls begin a 2 – 3 week rally.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
The Emini reversed up after a gap down below yesterday’s low. It then entered a tight trading range at the 60 minute moving average for most of the rest of the day. The bulls got trend resumption up into the close. Since the rally broke above yesterday’s high, today was an outside up day.
Because today closed near its high and it is an outside up day it is a buy signal bar for tomorrow on the daily chart. However, the past several days had mostly trading range price action. There is an increased chance that tomorrow will be similar.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
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.