Emini and Forex Trading Update:
Friday July 26, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini repeated its pattern from last week of strongly reversing trend days. Yesterday totally reversed Wednesday’s rally. Yesterday now is a double top with last week’s high.
Nothing has changed. The month-long wedge rally and the several big bear bars are telling traders that the Emini will probably go down for a few weeks. This is true even if it goes a little higher.
Logical targets are the higher lows in the wedge rally. That means around 2900 – 2900.
There is always a bull case. The bulls have a 40% chance of a big rally from here without a 2 – 3 week pullback first.
Next week’s FOMC meeting is unusually important. The Emini might stay sideways until then.
Overnight Emini Globex trading
The Emini is up 7 points in the Globex session. Yesterday formed a higher low major trend reversal on the 5 minute chart. The pattern was also a head and shoulders bottom.
Today will probably open above the neck line. This will trigger the buy signal. Every major trend reversal pattern has a 40% chance of leading to a trend.
However, the daily chart has been in a tight trading range for 4 weeks. Yesterday was in a trading range. Trading range price action is more common than trends. Finally, traders might want to remain neutral ahead of next Wednesday’s important FOMC announcement. Consequently, today will probably not be a strong trend day.
Since today is Friday, weekly support and resistance can be important, especially in the last hour. The bulls want the week to close near its high and possibly at a new all-time high. Since the week’s low is far below, the best the bears can reasonably expect is a close below the midpoint of the week.
EURUSD Forex market trading strategies
The EURUSD daily Forex chart broke to a new 52 week low yesterday. It is therefore still in its yearlong bear channel. However, every new low over the past year reversed up for 2 – 3 weeks within a few days. In addition, there is also a 5 month trading range and most trading range breakouts fail.
In addition, yesterday closed above the May low and above the open of the day. The chance of a successful bear breakout would have been greater if yesterday was a big bear bar closing on its low and far below the May low.
Consequently, this breakout so far looks like every prior new low in the bear channel. Traders will expect it to fail and for there to be a 2 – 3 week rally staring within a week.
Bear channels can last a long time but not forever. There is a 75% chance of an eventual bull breakout and only a 25% chance of a strong bear breakout with a conversion into a stronger bear trend. Since yesterday was a big doji day, which is neutral, traders need more information. They might be waiting for Wednesday’s FOMC Fed rate cut announcement before deciding on the direction of the next few weeks.
ioi Breakout Mode pattern
Today so far is a small day and it is also at yesterday’s open and close. An inside day after an outside day is an ioi Breakout Mode setup (inside-outside-inside, since the day before an outside day is inside of that outside day). Today will therefore be both a buy and a sell signal bar for Monday. Unless the bears begin to get a series on big bear days closing on their lows, the odds favor higher prices for at least a couple weeks.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been in a 20 pip range overnight. It is in the middle of yesterday’s range. Yesterday was a big doji bar on the daily chart with an open and close almost in the exact middle. Today is a continuation of that neutrality.
If today remains small, day traders will look for 10 pip scalps. Also, after yesterday’s big reversals, they will expect any 30 – 50 pip today move up or down to reverse.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
After a quiet open, the Emini rallied in a Small Pullback Bull Trend to a new all-time high. While there is no top yet, the rally is a buy climax on the daily and weekly charts. Consequently, traders expect a 2- 3 week pullback beginning within a couple weeks. Next Wednesday’s FOMC announcement is a possible catalyst.
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.