Emini Becoming Climactic Pullback Likely

Trading Update: Wednesday July 19, 2023

S&P Emini pre-open market analysis

Emini daily chart

• Yesterday’s bull breakout on the daily chart was climactic, increasing the odds of a pullback lasting a day or two.
• Typically, a bigger bull bar late in a breakout will attract profit-taking as traders see the bigger bar as a gift and a brief opportunity to take profits at an advantageous price.
• Climactic bars like yesterday typically lead to sideways trading and not a reversal. This means that the best the bears can expect is a brief pullback of the bull rally that began back on July 10^th.
• The Emini is getting close to 4,600, and it may have to reach it. Today’s opening session may test 4,600 and form an opening reversal down, leading to a bear bar on the daily chart.
• The April 21^st high (4,637.25) is close enough for the market to reach it before bears can take control. However, the market will probably have to get at least a brief pullback first.
• Overall, traders should expect a brief pullback lasting one to two bars soon. Traders will measure the strength of the pullback; if the bears appear weak, bulls will buy, leading to a second leg up.   

Emini 5-minute chart and what to expect today

• Emini is up 6 points in the overnight Globex session.
• The overnight Globex market has gone sideways in a tight trading range following yesterday’s strong bull rally.
• Since yesterday was so climactic, there is a 75% chance that the market will have two hours of sideways trading beginning before the end of the second hour.
• There is a 50% chance of follow-through buying on the open. If this happens, there is still a 75% chance of sideways trading beginning before the end of the second hour.
• The 4,600 big round number is not far away, and the market may have to reach it before the trading range begins.
• Traders should expect the bulls to probably be disappointed on the daily chart, which means today will likely be a bear trend or a trading range day.
• The open will probably have a lot of trading range price action. Generally, most traders should consider waiting 6-12 bars before placing a trade unless they are comfortable making quick decisions. This is especially true since there is a 75% chance of two hours of sideways trading today beginning before the end of the second hour.
• Lastly, traders should pay close attention to the open of the day as it will likely be an important price level.

Emini intraday market update

• The Emini gapped up and formed two consecutive bull trend bars on the open.
•  While bars 1 and 2 were strong enough for a second leg up, the odds favor a trading range open after yesterday’s consecutive buy climaxes. This means the market will probably form some opening reversal and will probably get back to the open of the day.
• The bulls have a bull trend from the open and they are hopeful that it will last all day. However, there is only a 25% of the market forming another strong bull trend day after yesterday.
• The Market might be forming a parabolic wedge top with bar 3,9 and 12.
• With the size of bar 1 and 2, the odds favor a trading range day and not a bear trend day. The bears first need to convince traders that the market is in a trading range. Next, they will need to break far below the lows of bar 1.
• The Bears are hopeful that they will be able to get a measured move down based on the high of bar 9 to the low of bar 1, projecting down to around 4,581.
• Bar 12 is a strong enough bar to get a second leg down. It also damages the close of the 60-minute chart. The market will probably not be a bull trend day. the bears are getting too much selling pressure and the overall context is bad for the bulls after yesterday’s close.
• Bulls see bar 14 as a double bottom with bar 5. They want a upside breakout and measured move up of bars 2 -14. More likely sideways.

Yesterday’s Emini setups

Richard created the SP500 Emini chart (Al travelling).

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. 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 has gone sideways for four days following the strong consecutive two-bar breakout (July 12^th and 13^th) that closed far above the May high. This breakout is a strong enough surprise that it will likely get a second leg up.
•  The bears are hopeful that the recent strong breakout (July 13^th) is the exhaustion that will lead to a second leg trap. While this is possible, it is more likely that the Bulls will get a second leg up.
• If the bears will take control, they will need to show more signs of strength. At a minimum, the bears must get consecutive bear bars closing on their lows to convince traders that the bears are gaining control.
• Overall, traders should expect the market to continue to go sideways to up, and the bulls will get a second leg up of the recent strong bull breakout.

Summary of today’s S&P Emini price action

Al created the SP500 Emini chart.

End of day video review

Here is YouTube link if video popup blocked:

Emini End of Day Review – Wednesday July 19, 2023 – Brad Wolff

See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.

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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.

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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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