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Emini may close above 3,800 today or tomorrow

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Trading Update: Thursday June 23, 2022

Emini pre-open market analysis

Emini daily chart

  • The daily chart is just under 3,800 and the May 20 low. The Emini may close above 3,800 today or tomorrow.
  • The odds favor a test up to the 4,000 price level before the market goes much lower.
  • The bears want any rally to stay below the June major lower high. As long as the market remains below the June high, the bears have a reasonable argument that the market is in a bear trend on the daily chart. If the market goes above the June high, the daily chart is either in a bull trend or a trading range.
  • While the odds favor a test above the June high, the market may have to go lower first. It is possible the market could go all the way down to the pre-pandemic highs (March 2020); however, that is not likely.
  • There are, however, measured move projections down from the February to March trading range and the May to June trading range. See the June 22 daily blog post for more details on this.
  • It is important to remember that the weekly and monthly charts are both in bull trends, and as strong as this selloff has been on the daily chart, the odds favor a trading range and not a bear trend. Trends do not typically go from bull trend to bear trend; they commonly transition into trading ranges.

Emini 5-minute chart and what to expect today

  • Emini is up 20 points in the overnight Globex session.
  • The daily chart is just under 3,800 and the May 20 low. The market will likely close above 3,800 today or tomorrow.
  • The odds favor a test up to the 4,000 price level before the market goes much lower.
  • The bears want any rally to stay below the June major lower high. As long as the market remains below the June high, the bears have a reasonable argument that the market is in a bear trend on the daily chart. If the market goes above the June high, the daily chart is either in a bull trend or a trading range.
  • While the odds favor a test above the June high, the market may have to go lower first. It is possible the market could go all the way down to the pre-pandemic highs (March 2020); however, that is not likely.
  • There are, however, measured move projections down from the February to March trading range and the May to June trading range. See the June 22 daily blog post for more details on this.
  • It is important to remember that the weekly and monthly charts are both in bull trends, and as strong as this selloff has been on the daily chart, the odds favor a trading range and not a bear trend. Trends do not typically go from bull trend to bear trend; they commonly transition into trading ranges.

Yesterday’s Emini setups

Emini bull trend from the open and then parabolic wedge top and trading range. Emini may close above 3,800 soon.
Above is the version that I post every day. Because I often get questions about what Daily Setups chart Encyclopedia members see, today I am including the example below of that version.
SP500 Emini Daily Setups Bull Trend From the Open Then Trading Range

Al created the SP500 Emini charts.

Here are several reasonable stop entry setups from yesterday. I show each buy entry with a green rectangle and each sell entry with a red rectangle. Buyers of both the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).

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

EURUSD Daily Second Entry Short, Tight Trading Range
  • The EURUSD has been going sideways since late April.
  • The bulls have a head and shoulders bottom (left shoulder April 28, head May 13, right shoulder June 15). Note a head and shoulders bottom is always a higher low major trend reversal.
  • The bears have a possible second entry short setup assuming today closes near its low and tomorrow triggers the sell.
  • The bears want trend resumption back down and a second leg down following the three-bar bear breakout ending on June 13.
  • The market has been in a trading range for two months, and the most important thing to remember is that the probability of a successful breakout up or down is very close to neutral. If one side had a big advantage, the market would not be going sideways.
  • While the odds favor a test of the April 21 high, the market may have to fall below the 2017 low (blue line) before the market can rally up to the April 21 high. The market came within 15 pips of the 2017 low back on May 13, and while that might be enough to satisfy a test, it is such an important price level that the market may have to fall below it.

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

  • Al will post chart after the close.
Emini Triangle breakout mode open with wedge top and then nested wedge bottom and midday bull trend reversal from head and shoulders bottom

Al created the SP500 Emini charts.

End of day summary

  • Today was a trading range open that formed a triangle (blue lines).
  • The market had a breakout of the triangle around 7:45 PT that formed a wedge top and led to the high of the day.
  • The market sold off from the wedge top to a new day’s low. The selloff down to 9:00 was a strong enough bear breakout to increase the odds of a couple of legs down and ended up forming another wedge bottom around 10:00 PT.
  • The 10:00 low was a nested wedge and was around the middle of the day, which is a common time to get a midday reversal.
  • The market ended up getting a bull breakout above the bear flag at 11:00, and the rally led to a test of the open of the day.
  • The rally to the open of the day at 11:45 was strong enough to lead to a couple of legs up and a possible test of the high of the day into the close.
  • The market reached 3,800 on the daily chart but failed to close above it. Tomorrow will be interesting to see if the bulls are strong enough to close above 3,800.

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

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.

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.

  • Brad, you mentioned that the weekly and monthly charts are both in bull trends while the daily is in a bear trend. This might be a dumb question, but can you explain what qualifies as a bear or a bull trend? In my eyes, they all look like a bear trend.

    • Hi Stephan,

      I confirm that Brad’s analysis is correct.

      If you look at the weekly or monthly chart, you will see small pullback bull trend or strong breakout. If you trade these higher timeframes and you bought anywhere during the rally of 2020-2021, you have to put your protective stop below Mar 2020’s low which is major higher low. The first strong reversal after small pullback bull trend should be minor and the market might go back to test all time high again. If the bears could not hit your protective stop, the premise of the bull trend is still intact. If it could, the market might change to a trading range on higher timeframe or even the bear trend.

      While you look at the daily chart, it is still doing lower high and lower low or, in other words, the pullback might not be ended. Brad talks many times about 21 April’s high which is major lower high on the daily chart that the bear argument is still intact if the bulls could not go above this high. While you see this pullback as a strong bear trend, it looks like a bear leg in trading range more than the bear trend, especially if you look at the weekly chart, you will see a lot of overlapped bar and many bad follow-throughs after breakout. We should see more buying pressure while it goes lower and lower.

      Hope it helps.
      Wei

      • Thank you. I understand what you are saying. I never doubted Brad, I just figured there was a simple technical analysis that classifies a bull or bear trend that I wasn’t aware of since I’m not as experienced or knowledgeable. Just looking at the charts on higher time frames, I see lower highs and lower lows.

  • I am referencing bar 56 at 11:10 (pst) on 6/22. Al posted a version from the Daily Setups chart Encyclopedia members see. I saw that bar as a exhaustion bar since it was at the end of a small pull back bull trend and the largest bull bar since the opening rally and I sold at the low close of bar 59. Just wondering why it is not labeled as a exhaustion bar.
    Was I just lucky or did I interpret that bar correctly?
    Thanks
    Robert
    love your posts and comment section, I learn more everyday

    • Glad the blogs are helpful. You are right in your comment about the exhaustion bar. The bar 56 breakout bar on 6/22 was enough of a surprise that the odds favored a second leg up which the bulls got two bars later.

      While bar 56 was an exhaustion bar it was a possible breakout of a trading range and a surprise bar. It was reasonable to take the short betting on the bar 56 being exhaustion. Most traders would likely use a use stop just in case there was a second leg up after bar 56.

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