Emini will likely test April 18 low this month

Trading Update: Monday June 6, 2022

Emini pre-open market analysis

Emini daily chart (brief update)

• The bulls have a second entry short following the three consecutive bull bar rally up to May 27. This is a reminder that the overall market is in a trading range.
• The bears are still hopeful that the three bull bars ending on May 27 will lead to a 2^nd leg trap. The bulls want the opposite and hope that the three consecutive bull bars will lead to a bull breakout and measured move up to around the April 18 low.
• The bears also want to close the gap back from the May 17 high, which was the breakout point of the three-bar bull rally up to May 27.
• Right now, the odds slightly favor the bulls getting more up. However, it would not take much for the bears to take control and create a 2^nd leg trap to test the May 25 low. Right now, the bears need more consecutive bear bars as a sign of strength.
• Overall, the market is probably going higher; however, what traders do not know is how deep will the pullback be. The market may go straight up to the April 18 low, or it could quickly test the May 25 low before testing the April 18 low.

Emini 5-minute chart and what to expect today

• I have to travel early in the morning and will not be able to provide an update before the market opens.
• Overall, traders should expect a trading range day which means expect lots of reversals up and down.
• If today is going to be a strong trend day up or down, there will be plenty of time to buy. If the market appears to be in a strong trend from the open, be sure and enter in the direction of the trend with at least a small position just in case the trend lasts for several hours.
• As the day will have a big gap up, traders should expect a test of the moving average before the market decides on trend resumption (continued direction of the gap) or trend reversal.
• In general, most traders would be better off waiting for 6-12 bars unless there is a good context for a breakout with follow-through or a credible stop entry such as a wedge top/bottom or a double bottom/top.
• On the open, there is a 50% chance that the initial move will have a successful major reversal and an 80% chance of at least a minor reversal of the initial move. This means that most moves are on the open reverse, so there is plenty of time to wait.
• It is very easy to take a big loss on the open, especially when there is a lot of overlap.

Friday’s Emini setups

Brad created the SP500 Emini charts.

Here are several reasonable stop entry setups from Friday. I show each buy entry with a green rectangle and each sell entry with a red rectangle.

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
***(No EURUSD Daily Blog Update today)***

Summary of today’s S&P Emini futures price action and what to expect tomorrow

Brad created the SP500 Emini charts.

End of day summary

• The market had a bull breakout on the open that led to an opening reversal down with three strong bear bars, which led to a measured move down.
• The bulls had a bull breakout on the open around 9:00 PT. While the odds favored a second leg up the buy, the close bulls who bought the bull breakout were quickly disappointed and sold out of longs during the next 12 bars leading to the bear breakout.
• In general, there is a 50% chance that the initial move (here, the 2-bar bull breakout) will fail and lead to a major reversal in the opposite direction.
• The opening bull breakout was still a reasonable buy for a second leg up. However, most traders would not be willing to hold long once the market started going sideways 10+ bars.
• The buy the close bulls gave up during the 9:10 outside down bear. This led to a measured move down in the form of a nested wedge bottom.
• Overall, the bears got a strong bear breakout that led to a weak bear channel which mainly was a trading range.

See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.

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Trading Room

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.

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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.

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