Trading Update: Friday July 22, 2022
Emini pre-open market analysis
Emini daily chart
- The bulls have done a great job getting consecutive bull closes above the June 28 high this week. This will likely lead to a successful bull breakout above neckline (June 28) of the double bottom (June 30 and July 14).
- Bulls want a measured move up from the double bottom to the top of the neckline projecting up. At a minimum, the bulls want to reach the June 2 major lower high, ending the argument that the daily chart is in a bear trend. Going above the June high would make the market either a trading range or a bull trend.
- The bulls ultimately hope this will be the rally that reaches an all-time high; however, more likely, the market will go sideways.
- It is essential to realize how much buying pressure the bulls have been getting since mid-June. It has only had six bear bars in the past twenty-two bars, which is impressive for the bulls.
- All the buying pressure and strong bull bars closing near their highs and above midpoints from June 21 – July 14 was a sign that the market may get an upside breakout.
- Yesterday is probably a buy the close bar, so bulls may buy the close with confidence that the first reversal down will fail.
- The bears will know that the first reversal down will fail. However, they will try their best to get some form of the micro double top, increasing the chances of a reversal down.
Overall, the market will likely go sideways to up and test the June major lower high. The bears will need to disappoint the buy-the-close bulls, so the market will probably have to go sideways before the bears can get a reversal down. - Lastly, the market is right at 4,000, which is a big round number. This is an important magnet so that the market may go sideways around this price level for most of today.
- Weekly chart Discussion below:
- So far, the bulls have done a fantastic job on the weekly chart. Right now, the bulls have a bull bar closing near the high, and the bulls will try their best to keep the bar near the high of the week.
- Bears will try their best to keep creating as big of a tail as possible on the weekly chart, which means they will push hard for today to be a big bear bar.
- The bears would like to get a close at the midpoint of the week, but they will probably be unable to do so.
- At the moment, the most important manet to pay attention to on the weekly chart is the high of this week for the reasons stated above.
Emini 5-minute chart and what to expect today
- Emini is up 9 points in the overnight Globex session.
- The Globex market has been mostly sideways during the overnight session except for small late rally.
- Traders should expect a trading range open for the U.S. Session. Until there is a clear breakout with follow-through, there is no breakout. If today is going to be a strong trend day, it will be clear by the price action.
- Since the daily chart has had three consecutive strong bull closes, traders should pay attention to any selloff intra-day, especially on the open. This is because the market may form an opening reversal and rally today. Look at yesterday as an example. The market formed a wedge bottom for the rest of the day, so that we may get a similar pattern today.
- Traders must be mindful that the market may go sideways most of today, making the open of the day a strong magnet.
- If we are not far below the open later in the day, traders should be aware that the bulls might get a strong rally late into the close, creating another bull bar on the daily chart.
- Overall, traders should be patient on the open and consider waiting for 6 – 12 bars before placing a trade. Most of the time, the market has to form a wedge bottom/top or a double top/bottom, so there is no rush to enter on the open. If the market does get a strong breakout on the open with follow-through, there will be plenty of time to enter.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
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 much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).
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 is beginning to stall at the moving average (blue line). Currently, the odds are buyers below and a test of the 2017 low and the June – July trading range low.
- The bulls have a 6-bar bull micro channel, so the first reversal down is likely to fail.
- While the odds favor a test of the 2017 low, it is essential to realize that the bears could get a test of the low close and 1.0000 big round number (Purple Line) before the EURUSD goes much higher.
- Some bulls who bought the close of July 19 would be disappointed with the two sideways bars, and if they exit back at the July 19 close, that could be enough to make the market retest the 1.0000 big round number.
- One thing important to realize is that the market is right in the middle of two critical magnets. The 1.0000 big round number, and the 2017 low. If the probability favored one side, the market would race up/down to the magnet. This sideways price action tells us the market is closer to neutral.
- Even if the market does reach the 1.0000 considerable big round number again, the odds still favor a test of the 2017 low and June – July trading range low.
- Overall, the market will probably continue sideways as bulls and bears fight over the breakout.
- Weekly chart Discussion below:
- Since today is Friday, the weekly chart is important.
- Currently, the market is right at last week’s high, which will probably be an important price level all day. The bulls will try their best to close above it. The bulls will try and get a strong rally today to get as strong a close as possible on the weekly chart.
- The bears want to keep the market below last week’s low and the current week to close below the week’s midpoint.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
- Al will post chart after the close.
Al created the SP500 Emini charts.
End of day summary
- The market formed a wedge top, leading to a lower high major trend reversal. The major trend reversal led to a strong bear trend that went sideways into the close.
- Bar 1 was a bear bar closing on its low, and bar two was a bull bar closing on high. This is confusing and increased the odds of trading range price action.
- The market formed a wedge top at bar 5 and sold off to a new low of the day at 7:10.
- The market formed a two-legged pullback at 8:00 that was also a lower high major trend reversal. At this point, the low close at 8:00 has not been retested, so the was a reasonable chance the market would test the low close soon.
- The 8:15 close was a strong enough surprise down to increase the odds of a second leg down.
- The bulls gave up on the 8:30 (Bar 21) follow-through bar, and the market became a sell-the-close bar and led to a small pullback bear trend for the next couple of hours.
- The bulls tried to break above the moving average at 9:35. However, the bulls likely needed one more bar and a close above the moving average to make the market Always in long.
- While 9:35 was likely to have a second leg up, the bears trapped the bulls on 9:40, leading to a double top and breakout below the neckline (of 9:30) and a measured move down that was reached at 10:40.
- Overall, when the market forms a small pullback bear trend like it did during 9:30 – 11, it is important not to buy until bulls have been able to make the market goes sideways, at least for a few bars at a minimum. It is easy to see bars like 10:40 and think it is a good buy. However, the channel down is so tight that the odds favor more sideways than up.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
Trading Room
Traders can see the end of the day bar-by-bar price action report by signing up for free at BrooksPriceAction.com. Al talks about the detailed S&P Emini futures price action real-time throughout the day in the BrooksPriceAction.com on trading room days. We offer a 2 day free trial.
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.
