Emini bulls need follow through today

Trading Update: Friday June 3, 2022

Emini pre-open market analysis

Emini daily chart

• Yesterday was a strong bull breakout for the bulls, closing above the high of the past three days. The bulls need follow through today to convince traders this is the start of a strong second leg up. More likely, the bulls will be disappointed, and today will not be a strong bull follow-through bar.
• The bulls are hoping this is the start of a strong second leg up from the three-bar bull breakout that ended on May 27.
• Bears hope that today will lead to a micro double top and that today will be a strong bear bar closing near its low, reversing yesterday. Next, the bears would want a test of the May 25 low (2^nd leg trap).
• At the moment, the odds are the market is going higher. The bulls need follow through today to increase the odds that this is the start of the rally up to the measured move target of the three consecutive bull bar breakout ending on May 28, which projects up to the April 18 low.
• Today is Friday, so weekly support and resistance are important. The bulls want today to close on or near its high. The bears will try hard to get this week to close with a tail on top, and the bigger the tail, the better for the bulls. The bears will try hard to get today to close below the open of the week; however, that is not likely.

Emini 5-minute chart and what to expect today

• Emini is down 35 points in the overnight Globex session.
• The Globex market has been in a bear trend since the early morning hours.
• At the moment, the market is going to have a gap down. Traders should expect a trading range open and test of the moving average.
• As always, traders should expect a limit order open and be cautious about buying too high or selling too low.
• Most traders will be better off waiting for 6 – 12 bars before placing a trade.
• Traders can also consider waiting for a credible stop entry such as a double top/bottom, wedge top/bottom, or a strong breakout with follow-through.
• Today is Friday, so the weekly chart support/resistance will become important, especially in the final hour of the week. Traders should be open to a strong breakout up or down that can happen in the final hour due to institutions fighting over the weekly chart close.

Yesterday’s Emini setups

Brad 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.

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 bulls have a double bottom following the May 23 & 23 bull breakout. It is also a breakout test of the May 5 high, and so far, it is an open gap which increases the odds of a measured move up of the May 5 high and the May 13 low projecting up to the April 21 high.
• One problem for the bulls is that yesterday’s buy signal bar is big, which increases the odds of going sideways (it is forcing traders to buy above the middle of an 8-bar tight trading range.
• Bears are still hopeful the market is forming a lower high with April 21. They will try hard to prevent the market from getting above it. However, that is unlikely.
• The market may have to test a 50% pullback of the May 28 rally and form a higher low major trend reversal before testing the April 21 high.
• Since today is Friday and the weekly chart is important, traders will pay a lot of attention to the open of the week. The weekly chart bar is a doji at the moment, which increases the odds of today closing near the open of the week.

Summary of today’s S&P Emini futures price action and what to expect tomorrow

Brad created the SP500 Emini charts.

End of day summary

• Today was a trading range day that followed a gap down.
• When the market gaps down, the odds favor a test of the moving average which often causes the market to go sideways to the moving average (blue line).
• Overall, when the market is in a trading range, it is important not to buy too high or sell too low. The market will always try and get traders to do the wrong thing, such as buy high bull close around 10:05 or sell at the close of 12:15.

• I will post a more detailed update on Monday (6/5/22)*.

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

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.

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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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