Trading Update: Tuesday June 28, 2022
Emini pre-open market analysis
Emini daily chart
- Emini bulls had a strong breakout last Friday (6/24); however, the breakout led to bad follow-through in the form of a weak bear bar.
- At the moment, the odds favor a second leg up from the June 24th rally and test of 4,000 big round number.
- The market is probably always in long. However, one has to question why yesterday was a bad follow-through bar for the bulls. This is because the bulls are uncertain of much higher prices which lowers the probability for the bulls.
- The market is also around a 50% pullback from the June selloff, which is a resistance level, and some bears will begin selling in this area, betting on a trading range or continued bear trend. Those bears do not care if the bulls get a second or third leg up as long as the market stays below the June high.
- The bulls hope that the rally up from the June 17 high is strong enough to lead to a second leg up that will reach the June high.
- If bulls can reach the June high, especially if the market goes several points above the June high, the market will either be in a bull trend or a trading range, but not a bear trend.
- Overall, there will probably be buyers below yesterday’s low for a second leg up, and the bears will need some double top before the bears can get a credible short.
Emini 5-minute chart and what to expect today
- Emini is up 10 points in the overnight Globex session.
- The market has been sideways for most of the Globex session.
- The market will likely have a small gap on the open
- Traders should expect a trading range open (80% chance). Less likely, the market forms a trend from the open up or down (20% chance).
- Since the odds favor a trading range open, traders should expect a lot of limit order trading and multiple reversals.
- If a trader has trouble trading the open, they should consider waiting for 6-12 bars before looking to buy.
- Traders can also wait for a double stop entry such as a double/top, wedge top/bottom, or a strong breakout with follow-through.
- Today has the potential to close above the open since the odds favor a second leg up on the daily chart, so that traders will pay attention to the buying pressure today.
Yesterday’s Emini setups
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
- The EURUSD is now in a 10-day pullback since the June 14 low close. The pullback is in a tight channel with several bull bars, which lowers the probability of any short.
- The bears are trying to form a wedge top with June 16th and June 22th (purple line). The bears can still argue that the market is always in short from the June 9th bear breakout, so the bears have a reasonable chance of reaching the June 13th bear close or the June 15th low.
- The bulls hope that any downside breakout below the wedge top (purple line) will be brief and follow a breakout above the June 15 low to the June 27 bear flag.
- Bulls would want a measured move up, taking the market above the June highs.
- The market is in a trading range. The bulls want the June 15 low to be a higher low that leads to an upside breakout.
- Bears see the June 9th selloff as a major lower high, and as long as the bears can continue to make major lower highs that follow lower lows, the bears can argue the market is still in a bear trend.
- Bears also want a test of the 2017 low and hope today sets up a credible wedge top (purple line) that will lead to a selloff and test of the 2017 low.
- The market is in the middle of a tight trading range, so the math is close to neutral. Most traders are probably better off waiting for a breakout and deciding if the breakout will succeed or fail.
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 bear trend from the open and an outside down day from yesterday.
- The opening had a strong bull breakout bar; however, the follow-through was bad, leading to a reversal down and a bear trend.
- The selloff down to 7:45 was strong, and at that point the day was likely to be either a bear trend or trading range day.
- Today was also one of the 20% of times when a trend from the open days last all day instead of forming a trading range day.
- Overall, it is important to trade small and sell pullbacks, expecting any reversal up to become minor, and the best the bulls can likely hope for is sideways trading.
- Today was a strong bear day leading to consecutive sell climaxes into the close. This means that tomorrow’s open will have a 75% chance of two hours of trading range trading within the first two hours.
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.
Bar 18 is a wedge at yesterday’s low. I thought that was a reasonable place for a long or to exit shorts. Why is that not marked?
After it tested yesterday high, and with yesterday low magnet so close, I wouldn’t have bought above bars. But I did buy bellow yesterday low thinking it’s gone bounce for at least a scalp. Unfortunately it didn’t even let me get out at breakeven. Maybe my fade trade didn’t work because a lot of buyers were trapped above 18 and they gave up bellow yesterday low instead of buying more.
Hi Matthew,
With very strong tight bear channel, there had no buy signal triggering above bar 14 and bar 17 was a bear doji which is a bad buy signal bar. There probably had more sellers than buyers above, expecting the bears shorting the strong bull close. I think Al would wait for at least two consecutive bull bars closing near their highs to consider buying.
Al did note bar 18 as a BRE (suitable for bears to exit above), in his Daily Trading Update in the Brooks Price Action website. But on this blog chart only swing stop-order entries are marked.
For the EOD chart review where you show the entries, is there any way you can use lines instead of boxes. It is not clear if you are playing open/close of bar or playing wicks of the bars. I am trying to study what better entries would look like again it is not very clear and very different if I enter at open or at the wick. Thanks in advance!
The entries on these charts are stops with the center of the box being the entry bar and the bar to the left the signal bar. The stop would be one tick above the signal bar for buys and one tick below for sales.