E-mini Should Form Sixth Consecutive Bull Bar On Monthly Chart

Yesterday was the entry bar for a High 1 bull flag buy signal on the E-mini. Yesterday was a reversal day because it closed near the low. However, it had a bull body and it is therefore a lower probability sell signal bar. If the bears get a reversal down from here, the context would be good. This is because it would be from a micro double top with Monday’s high and an expanding triangle top (July 7 and July 14 were the first 2 highs). Also, it would be from just below the trend channel line created with the May 7 and July 14 highs.

Because the daily chart is in a strong bull trend, it continues to break above resistance. Traders will keep betting that every 1- to 3-day selloff will lead to a new high until there is a strong reversal down.

Today is the final trading day in July. July has a big bull body and it should still have a bull body when the month closes today because the open of the month is 100 points down. That is probably too far to reach in one day.

The bull body would make at least slightly higher prices likely in August.

This is the sixth consecutive month with a bull body on the monthly chart. That has not happened in 10 years.

Since a seventh consecutive bull bar would be even more rare, August should have a bear body. That means August should close below the open of the month. This is true even it it rallies strongly for several weeks.

If August has a bear body, there would be a parabolic wedge on the monthly chart. That should lead to a 15 to 20% correction over the following month or two.

Most bars on all charts have conspicuous tails on the top and bottom. July is currently at the high of the month. That increases the chance that it will finish the month at least 30 – 50 points below the high of the month.

h2 E-mini 5-minute chart and what to expect today/h2

E-mini is down 30 points in the overnight Globex session.

Today will have a big gap down open. That reduces the chance of a Bear Trend From The Open.

The bulls want a Bull Trend From The Open, but what usually happens after a big gap up or down is the market enters a trading range for an hour or two. Once it gets near the EMA, the bulls will try to rally from a double bottom or wedge bottom within the range. The bears will try to resume the bear trend from a double top or wedge top near the EMA.

Weak sell signal bar yesterday on daily chart, but context is good for the bears (micro double top, expanding triangle, top of bull channel).

Because today is the last day of the week and of the month, weekly and monthly support and resistance can be important, especially in the final hour.

The most important weekly magnets are the open of the week and last week’s high. The bulls want a bull bar and a close above last week’s high. That would increase the chance of at least slightly higher prices next week.

Today will probably gap below the open of the week. If this week has a bear body, it will increase the chance of at least slightly lower prices next week.

The bigger the bear body and the more the week closes on its low, the more likely next week will trade below this week’s low.

There is no nearby monthly support or resistance. The open of the month is more than 100 points below and therefore very unlikely to be a factor.

h3 Yesterday’s E-mini setups/h3

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 E-mini.

Written By: Al Brooks