Trading Update: Tuesday June 14, 2022
Emini pre-open market analysis
Emini daily chart
- Emini bears got a close below the May 20 low and are trying hard to reach targets below, the measured move.
- The odds are today will have a close above the open and end the streak of consecutive bear closes.
- The bears see the rally up to June 1 being a higher high double top (May 17 as first push and June 2 as second push up). The breakout below the May 20 low is the neckline, and the bears hope the market will reach a measured move down, which would be around 3,450.
- The bears also broke below the neckline of the higher high double top (February as first push and May 29 as second) back in early May. Those bears still hope the market will get a measured move down to around 3,630, which is certainly possible.
- Often, when the market breaks below the neckline of a double top, it does not go straight down. Instead, it has deep pullbacks along the way, making traders question the premise of the double top measured move down. Here, the deep pullback was during the June rally.
- Since the bears have 4 consecutive bear bars on the daily chart the best the bulls can hope for is a minor reversal without first forming a micro double bottom.
- Lastly, there is a 20% – 30% chance the market falls back to the pre-pandemic highs (March 2020 area). Many stocks are already below the pre-pandemic highs; however, the overall market is not. This is a sign that the market could try and get there; again only a 20-30% chance that it will happen during this selloff.
- The daily chart is in the buy zone. However, the problem the bulls have is what I stated above. It is possible the market sells off much lower, so this will make traders want to see the market try and bottom first.
- The market may try to get more neutral into tomorrow’s FOMC report.
Emini 5-minute chart and what to expect today
- Emini is up 20 points in the overnight Globex session.
- The Globex market has mostly gone sideways, and, at the moment, it looks like it will open above yesterday’s close with a gap. This increases the odds of trading range price action.
- The bears have four consecutive bear bars on the daily chart, so the odds favor today closing above the open. This means traders will look to buy failed breakouts or buy a certain number of points away from the open, especially if the market has a couple of legs down.
- While traders will look to buy a reversal up below the open, they will trade the market in front of them and will not be in denial if there is a bear trend.
- Since the odds favor a trading range open, most traders will be better off waiting for 6-12 bars before trading.
- Traders can also consider waiting for a credible stop entry such as a double bottom/top, wedge bottom/top, or a strong breakout with follow-through.
- Important magnets to pay attention to today are the open of the day, the open of the week, and the May 20 low.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The bears have three consecutive bear bars creating a surprise bear breakout. The odds are the bears will get a couple of legs sideways to down.
- Bears will try hard to break below the May 13 low soon.
- The bulls hope the three consecutive bear bars will lead to a 2nd leg trap, and the market will test the top of the 2nd leg (June 9). The bulls will likely need a micro double bottom before traders are willing to buy for a swing up.
- Bears want a break below the May 13 low which would be a breakout below the neckline of a higher high double top (May 5 as the first push and May 31 as the second push). Next, they want the double top to lead to a measured move down, which takes us below 1.0000. While this is possible, it is unlikely at the moment.
- The odds favor continued trading range price action. However, the bulls will need to develop more buying pressure to erase the damage done by the three consecutive bear bars.
- While it is possible the bears get the measured move down, the market will probably continue to go sideways and at some point, reach the April 21 high as well as the March 31 high. Again, the bulls need to develop more buying pressure first.
- Also, the market came within 10 – 15 pips of the 2017 low on May 13, so the market may have to fall below it to see if there are more buyers than sellers at the 2017 low.
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 broad bear channel day, so that most traders would view the 5-minute chart as a trading range day.
- Traders would look to bet against successful breakouts at extremes (bet on failed breakouts).
- Broad channels can be frustrating because they mostly go sideways with occasional big moves.
- The rallies look strong and make the market always In long; however, the market never seems to get above a major lower high. This means the market continues down in a bear trend.
- The market will often go above minor lower highs, such as the parabolic wedge rally (red line middle of the chart).
- On the open, the bears got three consecutive bars down, which was followed by three consecutive bars up. This is big up, big down, big confusion, which means traders should expect a trading range open.
- The bulls tried several times to form a major trend reversal; however, every reversal attempt slowed trend resumption.
- Overall, it is important not to get hopeful of a strong breakout that leads to a big move. It is easy to think that with all the big bull bars, the market will get a strong bull breakout; however, until the market gets above a major lower high, the bears have a credible argument for a bear trend.
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.