Trading Update: Wednesday June 22, 2022
Emini pre-open market analysis
Emini daily chart
- Emini likely bounce and test of 4,000 big round number within the next month or two.
- The odds are the market will reach 3,800, which is the bottom of the May 20 low, sometime this week or next week.
- The Emini gapped up yesterday and had a bull trend bar closing above its midpoint.
- The bears want to prevent the bulls from reaching 3,800.
- Bears also want to create a double top with the June 15 high, leading to lower prices and a test of the 3,600 big round number.
- While the bears have several targets below, the odds are the market will reverse up above 3,800.
- The bulls will likely get back to 4,000 at some point in the next month or two.
- The bears have two measured move projections.
- One projection down is the February high and the April high (double top), which projects down to around 3,627 (if you use the February high as the double top). Other bears will use the April high as the double top, leading to about 3,568.
- Another double top is the May to June 2022 high. This measured move projects down to around 3,527 if one uses the May high. If one uses the June high to the May low, the measured move projects down to about 3,439.
- At the moment, it is not likely that the market is going straight down to these targets.
- More likely, the bulls will rally over the next few months.
- The current selloff on the daily chart is more likely a leg-in-a-trading range than a continued trend down. The bulls will probably have a leg up in the trading range lasting several bars.
- The bears see a major lower high at the June High. As long as the market is below this high, the bears can argue the market is in a bear trend.
- The bulls will try hard to get above this high to end the argument of a bear trend.
- Overall, the market is probably going back up to the 4,000 price level before the market sells off much lower.
Emini 5-minute chart and what to expect today
- Emini is down 62 points in the overnight Globex session.
- The Globex market has been in a bear trend for most of the overnight session.
- This selloff in the Globex session might be partly due to the market testing the June 17 high on the daily chart. June 17 is a weak signal bar, so the market should try letting scale in bears out.
- Since the market is likely to gap down, traders should expect a trading range open and test the moving average.
- It is possible the market has a trend from the open. However, traders will assume a trading range until they are proven wrong. If the open starts to form consecutive strong trend bars, traders will enter the trend’s direction.
- If a trader has trouble trading the open, they should consider waiting for 6-12 bars or until there is a credible setup such as a double bottom/top, wedge bottom/top, or a strong breakout with follow-through.
Yesterday’s Emini setups
Yesterday’s SP500 Emini chart to follow
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD has been going sideways for 6 bars following the three-bar bear breakout ending on June 13.
- The bulls are trying to form a major trend reversal. It does not matter if you call it a higher low or a double top major trend reversal since both mean the same thing. It is important to remember that most major trend reversals lead to minor reversals and continued trading range price action and are not major.
- The bears have a Low 2 short below yesterday. However, it is a bull bar following a 5-bar bull micro channel, so probably buyers below.
- The market is deciding between testing the June low or the June 9 top of the bear breakout. While the odds may slightly favor the rally and test of the June 9 high, the probability is very close to neutral.
- It is possible the market has to sell off below the June low before it reverses up.
- The key point is that the market would not be going sideways, forming a tight trading range if one side had a probability advantage. Most traders are betting off waiting for a breakout or test of an extreme of the two-month trading range.
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 bull trend from the open that led to a trading range day.
- When you get a bull trend from the open, there is a 60% chance that the day will convert into a trading range.
- The market was always in long by the close of bar three, so traders would buy, betting on a possible trend from the open.
- The bulls got a surprisingly big bull breakout bar (yellow box) that was enough of a surprise to lead to some kind of measured move projection. The bar was over 20 points, so any trader buying would need to trade small.
- A trader that did not want to risk 20 points could buy a 50% pullback of the breakout (yellow box) or wait for the stop entry a few bars later.
- It is important to note that bears that sold above the bar 4 high made money scaling in higher and getting out back at their original entry. This was a sign that the bulls may not be as strong as they appear.
- The bulls got four strong bull bars ending at 7:25 PT, leading to a second leg and a parabolic wedge top (high of day).
- Since the odds favored the day forming a trading range, it was reasonable to exit longs around the 7:25 area betting on a couple of legs sideways to down after the parabolic wedge top.
- The bears got a lower high major trend reversal that led to a 50% pullback of the initial bull rally.
- While the selloff down to 9:00 might have made the market always short, the odds favored a trading range, and a 50% pullback of the initial rally is the buy zone which is not an ideal location to sell. If traders were short around 9:00, they would need to make quick decisions and exit above a bull bar.
- The market rallied back to the high close and created a new high of the day around 11:20. However, the breakout to a new high was only one bar and quickly led to bad follow-through and exhaustion.
- One thing to note is that the rally up to 7:40 was by the close. Although 7:40 was possibly exhaustion and the best-looking bull bar late in the rally, it was a reasonable buy the close bar. This means traders should be able to exit back at their original entry (7:40 close) if disappointed. The market came close at 8:35. However, it failed to reach the 7:40 close. The point is that the rally from 9:30 had a reasonable argument to test the high close of the day (7:40).
- The market sold off back to the day’s midpoint at the end of the day, creating a tail on top of the daily chart bar.
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.