Trading Update: Thursday June 16, 2022
Emini pre-open market analysis
Emini daily chart
- The bulls got a reversal up yesterday; however, they probably need at least a micro double bottom which means the bears likely second leg down will follow.
- Market formed a bull bar yesterday, ending the streak of 5 consecutive bear bars on the daily chart.
- The bears want the second leg down to last many bars and reach 3,600, which is a measured move projection of the February to April trading range (double top).
- The next target is a measured move down based on the May to June trading range which projects down to 3,450.
- Lastly, the bears want a test of the pre-pandemic high.
- While the market may reach these projections, it will likely form a bottom soon and have to rally for at least a couple of months since the odds favor a trading range on the higher time frames.
Emini 5-minute chart and what to expect today
- Emini is down 78 points in the overnight Globex session.
- The Globex market had a strong selloff during the overnight session and has been going sideways for the past 4 hours.
- The day session will have a gap down and open around the lows of the past few days (support).
- The bulls and bears will both want a trend from the open; however, the day will likely have a trading range open (80% probability on most days).
- If the market does form a trend from the open, there is a 60% chance the day will form a trading range at some point and only a 20% chance the trend from the open will last all day.
- If a trader has trouble getting trapped in reversals on the open, they should consider waiting for 6-12 bars before placing a trade.
- Lastly, since the odds favor a trading range open, traders can wait for a stop entry such as a double bottom/top, wedge bottom/top, or a strong breakout with follow-through.
- Lastly, the bars are big, so traders must ensure they are trading an appropriate position size.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The market got close to the May 13 low yesterday. The bulls want a double bottom with May 13 and a test back to the June high. The bears want a successful breakout below the May 13 low and a measured move down to around 1.000.
- At the moment, the odds are the market will have to reach the 2017 low, which is at 1.0339. This means the market will most likely fall below the May 13 low.
- While the market may get a successful breakout below the May 13 low and 2017 low, it is more likely that the bulls will form a bottom and stay within the 2-month trading range.
- The bears got a strong surprise three-bar breakout on June 13; however, it is within a trading range, which lowers the probability for the bears.
- The longer the market goes sideways following this bear breakout (June 13), the increased risk this bear breakout is a 2nd leg trap.
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 gapped down and formed a triangle for the first half of the day, which led to trend resumption down.
- The market formed a trend from the open on bar 1. However, the leg down looked like a leg in a trading range, more than a bear trend.
- The bears got a bear breakout at 7:50 PT. However, the moving average was far away. The bears were not willing to sell this far away from the moving average, so bears took profits, and bulls started buying for a test of the moving average.
- By 9:40, the market was in a triangle, which is a breakout mode pattern. At this point, most traders should wait for a strong breakout up or down with follow-through.
- The bears got the bear breakout with follow-through around 11:00 PT. However, it was near the bottom of the range, so most traders would expect any selloff to be brief.
- Overall, today was a broad bear channel (basically a trading range). It is essential to understand that the bear channel mostly goes sideways and has occasional breakouts that are brief. This can be frustrating because, by the time a trader sees the breakout, there may be only a short second leg down before the market reverses.
- Also, trading ranges and channels often form the second leg traps, such as the 5-bar selloff down to 7:50. These breakouts often get a brief second leg down (can be one bar) and reverse up like they did today.
- Tomorrow is a Friday, so weekly support and resistance are important. So far, the weekly chart is a big bear trend bar. The bulls want to create as big of a tail as possible, and the bears want to keep the bar closing near its low.
- Tomorrow will likely have a bull close which will disappoint bulls on the weekly chart.
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.