Trading Update: Tuesday June 20, 2023
S&P Emini pre-open market analysis
Emini daily chart
- The Emini sold off last Friday after forming a buy climax the prior day.
- The bears hope the rally was a buy climax test of the 4,500 big round number. Next, they want the market to form a strong downside breakout to cause the bulls to give up.
- While the June rally on the daily chart is climactic, the channel up is tight. Any selloff will likely be brief and lead to a trading range instead of a bear trend.
- The bears will likely need to create more selling pressure before taking control.
- Since the daily chart is in an overall trading range, and the bulls reached the August 2022 high, traders should assume they will soon become disappointed.
- While the market can go higher, it will probably begin to go sideways on the daily chart for at least a few days and try to get closer to the moving average.
- The bears want today to become a strong entry bar following last Friday’s strong bear close.
- Overall, today will probably be disappointing for both the bulls and the bears and will have a lot of trading range price action.
Emini 5-minute chart and what to expect today
- Emini is down 15 points in the overnight Globex session.
- The Globex market has gone sideways for most of the overnight session. Traders should assume that today will have a lot of trading range price action.
- As I often say, most traders should wait 6-12 bars before placing a trade on the open. This is because the open usually have many reversals, and it is easy to get trapped trading a breakout.
- There is at least an 80% chance that the opening will form a swing trade beginning before the end of the second hour. There is also a 40% chance that the opening swing will double the opening range.
- It is common for the opening swing to begin after forming a double top/bottom or a wedge top/bottom. This provides good risk/reward for a trader looking to enter on a strong entry.
- Overall, traders should assume that today will have a lot of trading range price action. This means that the day’s open will likely be an essential magnet.
- If the day begins to form strong trending bars and breakouts, traders must not be in denial of a trend forming.
Emini intraday market update
- The Emini gapped down and went sideways for the first 5 bars of the day. The bears got the downside breakout, and the market ended up getting a selloff down to bar 12.
- The bears tried to get a bear flag up to bar 29 (8:55 AM PT).
- However, the bears failed, and the market broke to the upside and tested up to the day’s high.
- The sideways trading on the open lowered the probability for the bears.
- Also, the selloff down to bar 12 was climactic, which lowered the probability as well.
- As of bar 48 (10:30 AM PT), the Bulls have done an excellent job. The bull’s problem is that the selloff down to bar 12 was big, increasing the odds of a trading range day and not a bull trend day. If it is a trading range day, the market may test down to the 33 high (9:15 AM PT).
Friday’s Emini setups
Al created the SP500 Emini charts.
Here are several reasonable stop entry setups from last Friday (before US holiday break). 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 near 4-year library of more detailed explanations of swing trade setups (see Online Course/BTC Daily Setups). Encyclopedia members get current daily charts added to Encyclopedia.
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 had a strong upside breakout last week (June 15th), testing the May 10th low.
- The breakout is strong enough to have a 2nd leg up likely. However, the bar is big, which means it is climactic.
- The bears see the June 15th bull breakout as a buy vacuum test of resistance.
- The odds were that there would be profit-taking for a few days following the last week’s bull breakout bar before an attempt at a 2nd leg.
- The bulls want today to form a high 1 buy signal bar closing near its high. Next, they will wish to create a strong bull entry bar tomorrow, trapping the bears.
- Traders will pay close attention over the next few days to see how determined the bulls are to get follow-through. Since the market is in a trading range, traders should expect the bulls to become disappointed.
- The bears know that a 2nd leg up is likely. They will try and cause any attempt at a second leg to fail and lead to a reversal down.
Summary of today’s S&P Emini price action
Al created the SP500 Emini charts.
End of day video review
Today’s End Of Day review will be presented in the Trading Room and only available to the trading room subscribers.
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
Al Brooks and other presenters talk about the detailed Emini price action real-time each day in the BrooksPriceAction.com 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.
Hello,
I am curious to know why the buy above bar 1 is not marked. I view it as a big bull bar closing near its high after a big gap down, which makes it a BTC bull trend from the open in just 1 bar (like on slide 102 in Daily Setups Volume 11). Can you clarify?
Thank you,
Andreas
A couple things to consider are the size of the gap and the risk/reward of the entry. Slide 102, volume 11 was from December 2, 2022, which had a much larger gap down than yesterday. Larger gaps are more climactic and will attract more profit taking by bears. Bulls know this and will buy as well.
The 20 EMA often acts as support and resistance and the distance of your entry from the EMA is one thing to consider.
On December 2nd, if you bought the close of bar 1, your entry would have been at 4152.50. If you placed your stop 1 tick below bar 1 your stop would have been at 4136.75, so your risk would have been 15.75 points, but the 20 EMA was at 4187.75 or 35.25 points above your entry. So the EMA was more than 2x the distance of your stop.
Yesterday, if you bought the close of bar 1 your entry would have been 4441. If you place a stop 1 tick below bar 1 your stop would have been at 4431, so your risk would have been 10 points, but the 20 EMA was at 4447, only 6 points above, less than 1x your risk providing much less room for initial profit taking than on December 2nd.
Hope that helps distinguish the two days.
Thank you for the reply.
June 20th is very close to being a large gap down per definition, since the distance between the close of June 16th to the open of June 20th is 23.5 points. A large gap is anything greater than 50 percent of ADR or larger than the 5 past gap openings, which is also only a couple of ticks larger. I think it is reasonable to expect this gap opening to behave as a large gap opening. However, I understand your argument about the gap size, and it may have needed to be a couple of ticks larger.
Regarding the 20 EMA, there may not have been as much room as on December 2nd, but there is more than 6 points of room. I don’t think your 20 EMA calculation for June 20th is correct, since TS calculates it to be much higher – at 4,460.25 for RTH and no holiday.
“Regarding the 20 EMA, there may not have been as much room as on December 2nd, but there is more than 6 points of room. I don’t think your 20 EMA calculation for June 20th is correct, since TS calculates it to be much higher – at 4,460.25 for RTH and no holiday.”
You are correct, I had the limited holiday trading activity on June 19th affecting the EMA. The gap is much larger without that data. Sorry if I added to your confusion.
On the Globex chart there was heavy resistance right at the high of the first bar. Al important 20 moving averages for 5 min, 15 min and 1 hour where clustered together at that bar high. Also the Globex chart was in a downtrend and the high of that bar ended up right in the sell zone at the trend line. And we are still in that down trend. Take a look at the Globex 1 hour chart right now. We are in an 83 bar downtrend and your bar was in the middle of the trend about 33 bars.