Trading Update: Thursday June 9, 2022
Emini pre-open market analysis
Emini daily chart
- The bulls have had several strong trend bars closing near their highs. However, every bull trend bar in the current 8-bar tight trading range has been followed by a bear bar. This is a reminder of all the trading range price action.
- The bulls need to get an upside breakout soon, or the bears may get a bear breakout due to bulls giving up.
- Bulls hope that the current 8-bar tight trading range is part of a bull flag that will lead to a second leg up and test of the April 18 low; however, every bar that gets added to this tight trading range lowers the probability for the bulls.
- The bears hope that the rally up to May 27 will lead to a second leg trap and be followed by a test of the May 25 low.
- The bulls will try hard to prevent the May 17 breakout point from closing over the next few days.
- The bulls need to get an upside breakout of the tight trading range soon; otherwise, more and more bulls may give up, and the bears will get a successful bear breakout and test the May 25 low.
- Even if the bears reach the May 25 low, the odds still favor a test of the April 18 low at some point over the next couple of months.
Emini 5-minute chart and what to expect today
- Emini is down 25 points in the overnight Globex session.
- At the moment, the day session will have a gap down that will probably get closed early on the open.
- Traders should expect a trading range open and a limit order market.
- If a trader has trouble trading the open, they should consider waiting for 6-12 bars before trading since most opens have multiple reversals before a successful move.
- Traders can consider waiting for a credible stop entry or a strong breakout with follow-through.
- If the day is a trading range day, traders should try to identify the top and bottom of the range and avoid doing anything in the middle.
- Lastly, traders should remember that there is a 50% chance that the initial move up or down will lead to a major reversal.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The bulls are trying to get consecutive trend bars and trend resumption up and a test of the April 18 high.
- The bulls are hopeful that today will be a bull trend bar closing on its high, which would increase the buying pressure of the bulls.
- So far, the bulls have done an excellent job keeping the measuring gap open from the May 5 high to the May 25 low. This increases the odds that the market may get a measured move from the June 13 low to the May 5 high.
- The bears hope any upside breakout of the current tight trading range will lead to a wedge top and a couple of legs back down. Those bears ultimately hope that the market will form a double top with the April 24 high and test back down to the June 13 low, but that is unlikely.
- The April 24 high is a major lower high, and the bulls need to get above it. That would increase the odds of the market being in a bull trend or a trading range. Ultimately the bulls probably need to get above the March 31 high.
- Overall, the bulls want consecutive bull trend bars and a successful upside breakout, and the bears want to prevent the bulls from getting a decent trend bar today. The bears will try to avoid a close above the 12-bar tight trading range.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Al created the SP500 Emini charts.
End of day summary
- Today had a trading range open that continued as a trading range up until the final hour of the day when the bears got a breakout and strong sell the close market.
- The day opened with a big bar 1 and big bar 2. Considerable risk on a low probability trade is terrible for stop entries. This means selling bar 1 and buying below bar 2 are good trades. However, they are challenging to manage, so most traders should not use wide stops with limit orders.
- The bulls tried to break to the upside around 7:00 PT; however, the bulls failed, and the bears formed a 2nd leg trap. Usually, when a 2nd leg trap happens, the market will test the bottom of the second leg (bar 4) and go sideways. This meant the odds favored a trading range, not a bear trend day.
- The market continued in a trading range for the next several hours until the bears got the bear breakout below the Trading range.
- It is essential in a trading range to find the top and bottom of the range and avoid buying in the upper one third or selling in the lower one third (bad math).
- It is easy to miss the sell-off at the end of the day. It’s the final hour of the day, and the market has been in a trading range for the entire day. It is hard to shift gears and switch to trend trading.
- When there is a clear breakout below the range with follow-through (orange box late in the day on the chart), it is essential to get short with even a small position.
- Note: There is a CPI report at 5:30 AM PT tomorrow, June 10. The report can lead to a big move, so it is essential to be aware and trade small if trading the Globex session during that time.
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. 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.
Can you explain why bar 29(8:55 PT) was not a buy, like bar 34(9:20 PT) ? Is it because bar 28(8:50 PT) needs a 2nd Leg down? I entered at bar 29 and exit after bar 32(9:10 PT). I reentered at bar 34.
That was a reasonable thing to do. Bar 29 was a surprise and likely to have a second leg down so most traders would consider waiting for bar 34 before buying.