Trading Update: Monday June 27, 2022
Emini pre-open market analysis
Emini daily chart
- Bulls successfully closed above 3,900 on Friday. The bulls need follow-through for test of the June high and 4,200.
- At the moment, the market is close enough to 4,000 that it will probably have to test that price level soon.
- The market is probably back to always in long. However, the market is at a 50% pullback from the June high. The bulls may need a bull follow-through bar before traders agree that the market is clearly always in long.
- At the moment, there is a 60% chance the bulls will have a second leg up after the June 24th bull breakout. If today is a small bear doji, the odds will still favor a second leg up.
- If today is a big bear bar reversing 75% of last Friday’s bull body, that would significantly lower the probability for the bulls and make the market closer to 50% for both sides.
- Remember, the bears will see this rally as the buy zone and will try hard to prevent the bulls from reaching the June high. As long as the market stays under the June major lower high, the bears have a credible argument that the market is still in a bear trend.
- If the bulls can get above the June lower high, the market will probably be in a bull trend or trading range and not a bear trend.
- The bulls have a lower low major trend reversal. While the bulls hope this leads to a strong upside breakout, the market will likely go sideways even if it reaches the June high. Most major trend reversals are minor and not major. This means that most major trend reversals lead to trading ranges and not opposite trends.
- Today is important for the bulls. If the bulls can get a follow-through bar closing on or near their high like last Friday, it will increase the odds the current rally leads to an upside breakout.
- Overall, the market will probably go higher over the next couple of months.
- The bears still have targets below. They hope that last Friday is a pullback from the May to June higher high double top (May 17 high and June 2 high).
- The bulls hope this is similar to the rally up to the June 2 high, which was a breakout test (pullback) of the February to March higher high double top.
- When the market forms a double top or bottom, it is common to have a breakout test of the neckline of the double top, which is what happened last week.
- The problem the bears have is that Friday’s bull breakout is closing near the middle of the May to June trading range which might be too deep of a pullback for the May – June double top and increase the odds of sideways to up.
- Traders will pay close attention to today’s close. Bulls will try hard for a strong follow-through bar following last Friday. The bears want the opposite, increasing the odds of going sideways.
Emini 5-minute chart and what to expect today
- Emini is up 10 points in the overnight Globex session.
- At the moment, the market will likely open near Friday’s close.
- The bulls want today to close far above the open, creating a strong follow-through bar for last Friday’s bull breakout.
- Bears want a bear bar today, which would disappoint the bulls following last Friday’s breakout. Those bears hope today will be a big bear trend day, erasing last Friday’s rally.
- As always, there is an 80% chance of a trading range open and only a 20% chance of a bull trend from the open.
- If a trader has trouble on the open, they should consider waiting for 6-12 bars before looking to trade. This is because the open often have several reversals before a swing trend.
- A trader can consider waiting for a double bottom/top, wedge bottom/top, or a strong breakout with follow-through before looking to trade.
- Traders should pay attention to the open of the day, especially if it is close to the middle of the range, and there is a lot of trading range price action. This is because the open will likely be a magnet all day as the market decides on a bull or bear close.
Friday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The market has been going sideways and is in the middle of the two-month trading range.
- Right now, the market is in breakout mode and is close to a 50% probability of up or down.
- At the moment, the odds favor a test of the June 9 high. Traders do not know if the market has to test down to the 2017 low first before reaching the June 9 high.
- The bears want the downside breakout and successful breakout below the May to June trading range and the 2017 low.
- The odds are any breakout below the 2017 low will fail and lead to a reversal back up.
- The June 15 selloff came within 15 pips of the 2017 low. While the June 15 selloff came close to the 2017 low, the market may have to reach the 2017 low to satisfy a test of the 2017 low. This might be part of the reason for the market going sideways here.
- The essential thing to know is that the market is in the middle between the June high and the June 15 low. This means there is close to a 50% probability of a test of the June high, or the June 15 low. Since the probability is neutral, it is better to wait and see the breakout before trading.
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 was a trading range day that formed a triangle on the open.
- Bar 1 was a big bear bar; however, after yesterday’s strong rally into the close, the odds were the market would likely go sideways rather than straight down.
- With Bar 1 being a major surprise. The day was likely to be a bear trend or a trading range day, not a bull trend day.
- By 7:05, the market was two-sided and formed a triangle over the next 6 bars.
- The bulls broke to the upside, tested the open, and formed a wedge top around 9:00. Since the market was likely in a trading range, traders would be looking to sell out of longs around this price level and go short.
- The bears had three consecutive bear bars down to 9:30; it was low in the trading range and a possible 2nd leg trap which increased the odds of more sideways trading rather than straight down.
- The market ended up going sideways with big reversals for the rest of the day.
- Overall, today was a trading range day, and it is important to expect moves to fail until there is a clear breakout with follow-through of the range.
- It is also essential to understand that most moves in a trading range are minor. This means there is a greater risk of reversing the move.
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.