Trading Update: Friday June 10, 2022
Emini pre-open market analysis
Emini daily chart
- Emini bulls gave up yesterday on the idea of a second leg up from the May 27 bull breakout without first having a deep pullback. The bears want follow-through after give-up bar yesterday.
- The bulls had several chances following the three-bar breakout up to May 27 and kept failing to get the upside breakout multiple times during the tight trading range over the past week.
- At the moment, it looks like the rally up to May 27 is a 2nd leg trap, and the market will try and test the May 25 low, which is the bottom of the 2nd leg. Even if the market falls below May 27, there will likely be more buyers than sellers.
- Yesterday was a strong enough bear breakout bar that is probably enough of a surprise to lead to a second leg down.
- The bears hope that today will be a strong follow-through bar after yesterday’s bear bar, which would increase the odds of a test of the May low.
- The bulls want the opposite and hope that yesterday’s bear breakout will lead to a higher low, a test of the June high, and ultimately a test of the April 18 low.
- The bulls need a strong stop entry. However, the bulls may wait until a micro double bottom before buying.
- Today is Friday, so weekly support and resistance are important.
- At the moment, the market is at a 50% pullback of the past three weeks.
- While it is possible, the open of the week is too far away for the bulls to realistically reach it before today’s close. Bulls will be happy to close above this week’s 50% price level of around 4,093, which is above last week’s low.
- The bears want the opposite and hope the market will close below or near the week’s low.
- With today being the last day of the week, there is an increased risk of a strong breakout up or down in the final hour of the week. This is due to traders fighting over the weekly chart close.
Emini 5-minute chart and what to expect today
- Update: Emini is down 60 points in the overnight Globex session – with very strong sell-off after CPI report.
- The pre-market report following was written before the CPI report was released at 5:30 AM PT.
- The CPI Report often leads to a big move, so things could look very different from what I have written below.
- At the moment (3:30 AM PT), the Globex market is neutral going into the CPI Report at 5:30 AM PT.
- As always, traders should expect a trading range open and limit order market.
- If a trader has trouble during the open, they should consider waiting for 6-12 bars before placing a trade. This is because there is a 50% chance the first initial move will reverse and have a major move in the opposite direction. When I say major, I do not mean the opposite trend but a strong enough reversal that it is not a pullback of the initial move.
- Traders can always consider waiting for a stop entry such as a double bottom/top, wedge bottom/top, or a strong breakout with follow-through.
- If traders wait for the breakout, it is essential to ensure it is actually breaking above a credible support or resistance level and not just testing the top or bottom of the trading range (most breakouts fail).
- Since today is Friday, there is an increased risk of a surprise move up or down later in the day as institutions fight over the weekly chart close. It is essential to not be in denial if the day is similar to yesterday when the market forms a trading range and then gets a big breakout late in the day.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- Yesterday was an outside down bar closing below the 12-day trading range and a sign of bulls giving up. The bulls closed the gap above the May 5 breakout point, increasing the odds of more trading range price action.
- The bears hope today will have another big bear bar closing on its low, increasing the odds of lower prices. The bears are also hopeful that yesterday is a breakout below the neckline of a double top that will lead to a measured move down the 12-bar tight trading range.
- The bears will probably reach the May 23 low at a minimum. Trading ranges often test the beginning of the breakout, such as May 23, and turn up around the low.
- The market may also test the 50% pullback level, around the May 19 high (1.056), before reversing back up.
- The market is deciding if the bulls will get a higher low following a second leg up above the June high, or if the market has to test the May low before reversing up.
- Right now, the odds favor a higher low, and the bears more selling pressure in the form of consecutive bear bars to increase the odds of lower prices.
- One thing to mention on the monthly chart is that the April close (1.0547) will be a magnet. April was a big bear bar, and May was a disappointment bar for the bears. It is reasonable for the bears who sold the April close to try and exit breakeven or for a small loss after May’s big bull bar. This increases the odds of buyers around the April close (1.0547).
- Today is Friday, so weekly support and resistance are important, especially in the final hour of the week.
- Right now, today is a big bear bar closing on its low (weekly chart). While it is possible that the bulls are unlikely to reach the open of the week before the end of the day, the next reasonable target for the bulls is the low of last week (1.0627).
Summary of today’s S&P Emini futures price action and what to expect tomorrow
- Al will post chart after the close.
Al created the SP500 Emini charts.
End of day summary
- Today was a bear trend from the open that led to a trading range day.
- The day was decent bear trend bar closing on its low on the daily chart, even though it went sideways for most of the day.
- The market gap was down and formed a bear trend from the open with bar 1.
- Bar 4 was a reasonable 2nd entry short that led to a 7-bar bear microchannel which is good for the bears.
- As strong as the bears were on the open down to 7:30 PT, there was only one big bear bar, and the rest of the bars had a lot of overlap, which increased the risk of a trading range. Also, when you get a trend from the open, there is a 60% chance the day will form a trading range at some point.
- The market went sideways for the next 2-3 hours as the market decided on a trend resumption down or a trend resumption up (major trend reversal).
- Overall, in a trading range, it is important not to be hopeful and to expect the bulls to become disappointed after 2-3 legs up in a rally and the bears to become disappointed after 2-3 legs down in a selloff.
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.