Posted 7:15 a.m.
The Emini rallied from the open and is Always In Long. However, bear scalpers have been making money with limit orders, which increases the chances that the rally might have a deep pullback or that there might be a trading range soon. The bulls need to get strongly above the moving average and above yesterday’s low. Until then, this could still be a bull leg in a trading range. However, the rally is strong enough so that there will probably be buyers below, even if there is a deep pullback.
The bears want a parabolic wedge top and a reversal down, but the odds are that there are buyers below, even if there is a deep pullback. The best the bears can probably get over the next couple of hours is a deep pullback, and it will probably be bought.
The bulls kept the market above last month’s low. They want July to be an inside bar instead of the entry bar for the short below last month’s sell signal bar.
My thoughts before the open: Traders learning how to trade the markets expecting a reversal
The Emini has had 10 consecutive bear bodies on the daily chart, which has not happened in 10 years. There is an 80% chance of today closing above its open. I said that Wednesday and Thursday last week, but it again formed bear bodies. Today will probably gap down in an oversold Emini market, and that increases the odds of a bull body today. The day trading tip is to watch carefully after 11 a.m. If the Emini is below the open, day traders should look for a buy setup for a swing up into the close, expecting the close to be above the open. This would end the series of bear bodies on the daily chart.
Every price action trading strategy has to incorporate the opposite possibility, especially in high probability situations. If the opposite occurs, then traders will all be positioned in the wrong direction. This is why low probability events often lead to big trends. Traders are in denial and the trend has to go a long way before traders finally believe it.
With the Emini as oversold as it is and with last week’s breakout below a 3 month trading range, the bulls have a good chance of creating a bull trend day and a reversal back up into the trading range. Most trading range breakouts fail, and the Emini is still within the larger 4 and 8 month trading ranges, and this reduces the chances of too many days in one direction (it has sold off for 2 weeks, which is a lot of bars on the daily chart).
The Emini will probably gap down today, which would be a bear breakout below the 60 minute bear flag. However, because the Emini is so oversold, the breakout will probably fail and become the final flag. We do not know if the end of the 60 minute bear swing will be followed by a trading range or a bull trend. However, we do know that the 60 minute bear swing will probably end today and traders learning how to trade online should be ready. The intraday trading strategy is to bet on the odds, which favor one or more bull swings today either within a trading range or a bull trend.
The monthly chart had a sell signal bar last month and the low of the signal bar is 2046.75. Since there will probably be a bull swing today, the Emini bears might try to trigger the sell on the monthly chart before that swing begins. This means that there might be some early selling for a hour or two to trigger the monthly sell signal. However, because the day will probably close above its open, the bear breakout below last month’s low will probably be bought.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
The Emini rallied to above the 60 minute moving average and then reversed down from a parabolic wedge. After testing the open of the, it bounced, and closed above the open.
Today was the 1st day in 11 days to close above the open. Although there was a deep selloff in the morning that tested the open, the Emini reversed back up to close in the middle. Today was a trading range day, and there will probably be trading range trading for another day or two as the Emini decides whether to trade below the June low and trigger the monthly sell signal
Best Forex trading strategies
Despite the “No” vote in Greece, there was not much of a reaction in the financial markets because it was not news. The market anticipated it and already discounted it. Traders should not expect a big breakout and trend in any market because of it. However, Forex day traders should always be ready for a strong breakout with follow-through in either direction because it has the best chance of a swing trade and the highest probability for scaling Forex markets.
There was a gap down in the EURUSD on the daily chart on the open last night, but it closed. This is a sign of a trading range and not a strong bear leg. It is still above the June 28 low and the trading range since May is now in a triangle within the larger trading range of all of 2015. It is in breakout mode. The 5 minute chart traded down in the European session to the low of the Asia sessions, but day traders learning how to trade the markets should know that a bear channel is a bull flag and the odds therefore favor a swing sideways to up over the next couple of hours.
There is also a bear channel and bull flag on the 5 minute chart of the EURJPY.
The USDJPY daily chart is in a bull flag after breakout above a 6 month tight trading range in a bull trend. The bulls want a bull breakout above the bull flag, and the bears want an endless pullback and then a bear breakout below the bull flag, followed by a selloff back into the final flag below 120. The 5 minute chart gapped down on the news last night, but has been rallying since. The rally is in a broad bull channel and it is testing lower highs from last week. Until there is a breakout above those lower highs, day traders who are trading the market for a living will treat this rally like a bull leg within a trading range and expect it to fail.
The USDCAD continues to rally with the fall in crude oil. The rally of the last few days is in its 3rd push up on the 60 minute chart and is stalling at last week’s high. The 60 minute chart looks like is is transitioning into a trading range. The rally to the new high on the 5 minute chart last night was strong, but it is a 3rd push up and it might be forming a 60 minute higher high major trend reversal. With 4 consecutive bull bars on the 60 minute chart, the best Forex strategy is to wait for a 2nd entry short on the 60 minute chart, which would provide good Forex trading for beginners.
See the weekly update for a discussion of the price action on the weekly candlestick 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, and a 2 day free trial is available.
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.
Hey Al,
by the close of bar 1, did you really think buyers directly below were most likely? I thought the odds favored at least some more bars down because there was room to the may low left and the first bar was a very good looking bear reversal bar. Wasn’t the probability even High enough for a scalp down?
Thank you so much in advance,
Paul
My thought was that the Emini was so oversold that the odds were that it was not going to fall much more. I also thought that this was potentially a good example of news that was anticipated and discounted too much. The chance of today closing above the open was 80%, and I think most traders were very eager to buy a big gap down. The big gap down increased the chances of a strong rally. Traders were willing to sell for a brief swing down, but most wanted to see a strong entry bar on the 2nd bar. Instead, they saw a reversal. I thought this was more likely a bear trap and that there would be buyers below the 1st bar, or that they would come in soon.
Al,
I have bought some of your books and your course. Thank you for creating the course, apparently I don’t learn as well as I thought through reading. Now that I have the course things are much clearer.
In today’s Intraday comments at 7:15 you stated that the market was always in long. I think it would be helpful if you would state the times when we should have recognized a change in always in direction so that I can calibrate myself. It does not need to be real time, but it would be helpful if I could go back through yesterdays price action and say I should have known earlier or not.
Thanks,
Thaddeus Wilkerson
Most traders saw it as long once the 3rd bar closed. At that point, there were consecutive bull bars closing above their midpoints, and both had good size bodies.