Trading Update: Wednesday July 28, 2021
Emini pre-open market analysis
Emini daily chart
- Yesterday was a bear day after a strong 5-day rally to a new high.
- There is now a reversal down from an expanding triangle top. That is a major trend reversal pattern.
- When the context and sell signal bar are good, there is a 40% chance of a swing down and a 30% chance of a bear trend.
- Here, Monday was the sell signal bar and it was a bull bar. That is a bad sell signal bar.
- Also, this is the 1st reversal down after 5 bull days. That is bad context.
- Finally, yesterday closed above its middle, and it was therefore a weak entry bar.
- So far, this a weak reversal attempt. The bears will probably need at least a micro double top before they will have a 40% chance of more than a 3-day pullback.
- Yesterday is a High 1 buy signal bar, but it had a bear body. That is a low probability buy signal.
- Not a good buy signal and not a good reversal down increases the chance of more sideways.
Emini 5-minute chart and what to expect today
- Emini is up 6 points in the overnight Globex session.
- There is an FOMC announcement today at 11 am PT. Day traders should exit their positions ahead of the report.
- There is usually a big, fast move in both directions in the 1st few minutes after the report. Therefore, day traders should wait at least 10 minutes before resuming trading.
- Day traders should be open to anything after the report. There can be a trend in either direction, and it can be strong or weak. There also can be a trend reversal. Least likely is that there will be no significant reaction and the Emini will enter a trading range.
- Traders should trade today as if there are 2 separate sessions. What takes place after the report has very little correlation with what happens prior to the report.
- Ahead of the report, the bears want strong follow-through selling. But after 5 strong bull days, a 2nd strong bear day is unlikely.
- The bulls want a rally to reverse yesterday’s selloff.
- A strong bear trend is unlikely ahead of the 11 am PT report.
- The report creates uncertainty. That increases the chance of trading range trading.
- It also increases the chance of at least a minor reversal if there is a trend on the open.
Yesterday’s Emini setups
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- Three consecutive bull bars after consecutive wedge bottoms. This increases the chance that a reversal up over the next couple of weeks has begun.
- The bulls need to break strongly above the 20-day EMA to convince traders that the July low will hold through August and that the rally can reach the June 25 lower high.
- Yesterday was only a doji bar and the rally stalled at the 20-day EMA and the top of the 2-week tight trading range.
- The daily chart is in Breakout Mode. The bulls want a rally to the June 25 high.
- The bears want a breakout below the March and November lows at the bottom of the yearlong trading range.
- This week broke above last week’s high on the weekly chart. There is now a higher low double bottom with the March low.
- However, there have been 9 consecutive weeks on the weekly chart where every high has been below the high of the prior bar. That bear micro channel is a sign of relentless selling.
- Consequently, the rally on the daily chart will probably not continue up for more than a few weeks. If it reaches the June 25 high, there will likely be about a 50% retracement from there.
- There is an FOMC announcement today at 11 am PT. It can affect all financial markets. Therefore, EURUSD day traders should exit positions ahead of the announcement.
- Furthermore, there is often a big move in both directions immediately after the report. Consequently, day traders should wait at least 10 minutes after the report before resuming trading.
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, but bounced from a small double bottom at the EMA.
- Entered a trading range, which was a triangle.
- Failed bull breakout and then weak selloff into 11 am PT FOMC announcement.
- Major Bull Surprise Bar on the announcement so either trading range or bull trend was likely for rest of day.
- A weak rally reversed down from a new high, and today was a trading range day.
- The Emini has been stuck at 4,400 for 4 days.
- It has oscillated around the open of the week all week, which is near the 4,400 Big Round Number.
- July ends on Friday and it will probably be the 6th consecutive bull bar on the monthly chart. That has not happened in 10 years, and it makes a bear bar likely in August.
- If August is a bear bar, it will probably be the start of a 2 – 3-month pullback of 15 – 20%,
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 Time
When I mention time, 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.