Trading Update: Monday June 13, 2022
Emini pre-open market analysis
Emini daily chart
- Emini testing 3,800 big round number and is currently deciding if it needs to go lower to find buyers. The 3,800 level is a 20% correction from the all-time high, attracting long-term buyers.
- These buyers are value investors and will be happy to buy a 25%, 30%, or even 40% correction because they see the market at a discount and an excellent opportunity to buy at a cheap price.
- Bears want a successful breakout below the May 20 low, and while it is possible, it is more likely there will be buyers at this price level.
- Today will likely disappoint the bears, and the market will find buyers at the May 20 low; however, the bulls may give up, and the bears will get their breakout.
- It will be important to see if today is a bull or bear close.
- The channel down to May 20 was tight, and the rally up to June 1 was a strong trendline break. The bulls will hope that the current selloff is just a test of the May 20 low and the market will form a double bottom here and test up.
- The selloff down over the past couple of trading days is strong enough that the bulls will probably need some kind of a micro double bottom before the bulls can get a credible buy.
- Overall, the market reached a significant support level during the Globex hours (May 20 low, which is a 20% correction). Traders will be eager to see if there are more buyers or sellers at the May 20 price level.
Emini 5-minute chart and what to expect today
- Emini is down 90+ points in the overnight Globex session.
- As stated above, the Globex market is testing the May 20 low, which is the 20% correction level.
- This means the market will have a large gap down on the open.
- Traders should expect a trading range open and sideways to the moving average before a big move happens.
- Since the gap is big, there is an increased risk of a trend from the open. If that happens, there is a 60% chance that the market will form a trading range at some point in the day. There is a 20% chance that any trend from the open up or down will last all day.
- There is also a 50% chance the initial move up or down will reverse, so traders. This means there is a 50% chance that the initial move up or down is wrong and goes the opposite direction.
- As I often say, if a trader has trouble on the open, they should consider waiting for 6-12 bars before placing a trade. This is because the market often goes sideways on the open.
- Lastly, traders should also consider waiting for a credible stop entry such as a double bottom/top, wedge bottom/top, or a strong breakout with follow-through.
- Lastly, the bars are big, so traders must ensure they can properly handle the increased risk.
- Overall, today has the potential to be a big trend up or down due to the market testing the May 20 low. More likely, today will have a lot of trading range price action and disappoint the bulls and bears.
Friday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD may test the May 13 low within the next few days. The bears will likely be disappointed, and the market will go sideways.
- The past two trading days (June 9 & 10) are both big bear bars closing on their lows. They are strong enough to make the market always in short and increase the probability of a second leg down.
- Although the bulls had a strong rally lasting more than 12 bars, the bulls failed to get above a major lower high (April 21), so the bears channel is still intact.
- So far, the bears have done an excellent job reversing all the bars to the left. This will increase the odds of a second leg down since there will be disappointed bulls who may use any bounce up to reduce their loss.
- The market may have to fall below the 2017 low (1.0339). The May 13 low came within ten pips of the 2017 low and bounced up; however, the bulls appear to be giving up, which increases the odds that the market will have to fall below the 2017 low to see if there are more buyers or sellers below.
- While the bears may get a strong breakout below the 2017 low, it is not likely. This means the odds favor buyers at or around the 2017 low.
- Since buyers are likely at the 2017 low, the odds favor the current bears being disappointed soon. While the recent bear breakout is strong enough for a second leg down, the second leg could be small and lead to a failed breakout of the 2017 low.
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 formed a parabolic wedge selloff that led to a late trend resumption.
- When you have a big gap down, there is an 80% chance the market will form a trading range on the open and only a 20% chance of a trend from the open lasting all day.
- Today was a trend from the open that formed a trading range that led to late trend resumption.
- During the first 6-8 bars, the bulls tried to form a bottom but failed, and the market got a strong breakout (major surprise) with a follow-through which led to a couple of legs down forming a parabolic wedge bottom.
- The rally around 8:15 led to a sharp reversal up, which was a major bull surprise and likely to lead to 2-3 legs up.
- At this point, the market had a big move down, followed by a big move up, likely to lead to sideways trading.
- The bulls tried several times to form a higher low major trend reversal around 11:00 PT. However, it led to a trend resumption down and a new low of the day.
- As a general rule of thumb, it is important not to buy too high or sell too low in a market that looks like a trading range.
- Overall, today was good follow-through for the bear and a close below the 5/20 low.
- This Wednesday is an FOMC Day, and the market will likely have to bounce and get more neutral going into the report.
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.