Trading Update: Wednesday June 15, 2022
Emini pre-open market analysis
Emini daily chart
- Today is a FOMC report day, so there is the potential for a big move up or down at 11:00 PT. Bulls want rally after report.
- The bears have five consecutive bear bars on the daily chart, so the first reversal up will likely fail.
- The bears hope the market will get a measured move down from the May 17 and May 23 higher high double top. The breakout below the neckline (May 20) was strong enough to increase the odds of a second leg down. A measured move of this double top would lead to just above 3,400, although unlikely the market will reach it on this initial move down, but it is certainly possible (maybe 35% probability).
- The market also went below the neckline of the February – March double top bear flag at end of April. A measured move target would lead to around 3,6012, which is certainly possible the market will have to reach it. Again, the odds favor a bounce first, though.
- Double tops and bottoms often have a lot of pullbacks after the initial breakout below/above the neckline, making it hard to hold for the measured move projection.
- It is common for the market to retest the neckline of double tops, such as the rally that led to May 31. This makes traders question their premise on the double top and measured move down.
- The bulls want to buy; however, most will likely wait for a bottom such as a micro double bottom before they are willing to buy for a swing.
- Overall, the market will probably have to bounce soon as the bears begin to take partial profits and the bulls buy for scalps.
- Today will likely close above the open since the bears have five consecutive bear bars, which are not common. This means six consecutive bear bars are even less common.
Emini 5-minute chart and what to expect today
- Emini is up 35 points in the overnight Globex session.
- Today is a FOMC report day, so traders should treat today as two different days, before and after the report is released at 11:00 PT.
- Traders should exit any trade around 30 minutes going into the report.
- The day session will gap up and has the potential to become a bull trend day.
- Bulls hope today will close on its high and above the May 20 low, closing the gap.
- Today traders should expect a limit order market (trading range open).
- Most traders should consider waiting for 6-12 bars before placing a trade if they have trouble trading the open.
- Since 80% of opens have a trading range open, most traders should consider waiting for a stop entry such as a double bottom/top, wedge bottom/top, or a strong breakout with follow-through.
- Also, traders should wait at least 10 minutes after the 11:00 PT before trading since the FOMC report often has a strong reversal after the first 5-minute bar.
- Traders also need to be mindful of risk. The bars often get bigger during the FOMC report (11:00). This means traders need to trade smaller than average position sizes.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The bears have a surprise bear breakout lasting three bars that ended on June 13. This breakout is probably strong enough to lead to a couple of legs down.
- The market is in an overall trading range, so the three-bar bear breakout may have a deeper pullback than bears want before a second or third leg down.
- The bulls expect another leg down after the three-bar bear breakout. These bulls will try hard to create a 2nd leg trap following any second leg down.
- If the bears get a small second leg down and a reversal up, it would create a small micro double bottom, and increase the probability of a reversal up.
- The bears want a break below the May 13 neckline of the double top and a measured move down, which projects to around 1.0000. It is unlikely the market will reach that projection, but it is possible.
- More likely, the market will continue in a trading range, and the bulls will ultimately test the June high, April 13 high, and the March 31 high.
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 formed a trading range going into the FOMC release.
- The first FOMC report bar was a large outside down bar with weak follow-through in the form of a large doji bar.
- The FOMC report bar was large enough that the odds favored a second leg down.
- The bears got a second leg down to 11:30. However, it had a big tail below, which increased the odds of a reversal.
- The bulls got a 2-bar breakout at 11:45 PT. However, the follow-through was disappointing, which increased the odds of being more sideways.
- Overall, treating the FOMC Day as two different days is important. Trade like one usually would up until an hour or so before the report. Then treat the FOMC release as a different day.
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.