Trading Update: Wednesday June 29, 2022
Emini pre-open market analysis
Emini daily chart
- The bulls will see yesterday as a pullback and want a second leg up test of 4,000.
- Yesterday was outside down surprise breakout bar. It is probably a strong enough surprise to have at least a small 2nd leg down. However, it follows four consecutive bull bars, so the second leg will likely go sideways.
- The bulls see yesterday as a pullback from the rally beginning on June 17th. They want the market to form a higher low above June 17 and lead to a test of the June high.
- Bears saw the rally up to June 24th as a 50% pullback of the June high. They sold the close of June 24, betting the bulls would not be strong enough for another strong follow-through bar after the June 24th close.
- The bears want today to have another strong bear trend bar and increase the odds of a test of the June 17 low.
- The bulls need to get above the June 2nd major lower high to convince traders that the market is no longer in a bear trend and is now either in a bull trend or a trading range.
- Overall, today will be important to see if the bears can get follow-through, or will the bears be disappointed just as the bulls were disappointed after the June 24th bull breakout.
Emini 5-minute chart and what to expect today
- Emini is up 6 points in the overnight Globex session.
- At the moment, there is no gap, and the Globex market is at yesterday’s close.
- If the market does open with little to no gap, the odds are the day will have a trading range open, as it usually does.
- Traders should expect a trading range open. However, one cannot be in denial if the market starts to get a trend from the open.
- If a trader has trouble trading the open, they should consider waiting for 6-12 bars before placing a trade.
- Since the odds favor a swing trade at some point on the open, traders should look for a double bottom/top, wedge bottom/top, or wait for a strong breakout with follow-though.
- Most importantly, traders should expect lots of reversals on the open and not get trapped into buying too high or selling too low. There is a 50% chance the first move will completely reverse on any given open. An example would be yesterday’s (June 28) bar 1 bull breakout that reversed several bars later.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD has been in an 11-bar pullback since the June 13 bear breakout.
- The market is deciding on a test of the 2017 low, or if the market will get a bull breakout of the current pullback (bear flag) and a measured move up above the June high.
- Right now, the probability slightly favors the bears but not much. The market is going sideways between two important prices (June high and 2017 low), which tells traders that the market is balanced.
- The market has tested the 2017 low twice and came within 20 pips of it on May 13, which might be enough to satisfy the test.
- The bulls ultimately want May 13 and June 15 to be a double bottom, leading to a break above the neckline and a measured move up, which would take the market up to the May 31 high.
- The bulls will need to get above the April 21 or May 31 major lower high to convince traders that the market is either in a bull trend or trading range and no longer in a bear trend.
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 trading range day that ultimately formed a large triangle.
- This was bad follow-through following yesterday’s big bear trend bar on the daily chart.
- Bar 1 today was a big bear bar; however, after yesterday’s consecutive sell climaxes into the close, the odds favored sideways and not much more down.
- Bar 1 was also big bear bar with big risk, so traders would hesitate to sell that far down.
- Bar 2 and 3 were weak follow-through bars for the bears and increased the odds of a reversal back to the open of the day.
- Bar 4 was a credible buy for a possible low of the day. However, the day favored a trading range day, not a bull trend day.
- By the first hour of the day, it was pretty straightforward the day would be a trading range day, and traders would bet against a successful breakout.
- Also, it is essential to realize that once a swing trade had a couple of legs up and formed a wedge top or a valid second entry, swing traders would exit, causing the market to reverse.
- It is essential in a trading range to assume all breakouts will fail until there is a clear breakout of the overall 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.
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.