Emini and Forex Trading Update:
Wednesday June 17, 2020
I will update again at the end of the day.
Pre-Open market analysis
The Emini opened with a big gap up yesterday, triggering the High 1 buy signal on the daily chart. That gap up formed a 3 day island bottom.
However, the Emini collapsed to below Monday’s high and closed the gap. It the rallied from there and went sideways for the rest of the day. The 2 day rally is strong enough for traders to expect at least slightly higher prices this week.
When the market has big moves up and down, traders trade the reversals. They buy low, sell high, and take quick profits. The result is a trading range. This could last for several days.
A trading range is a balanced market. Neither side has a big advantage. The bulls want the rally to continue up to the gap on the weekly chart above the February 24 high. They then want a new all-time high.
However, the bears want a lower high and then a 15% correction. Despite the strong 3 month rally, a 2nd leg sideways to down is likely after the February/March crash. This is true even if there is a new high first. At the moment, a lower high is more likely.
Overnight Emini Globex trading
The Emini is up 12 points in the Globex session. Yesterday ended with a double bottom higher low major trend reversal. That increases the chance of higher prices today.
But the 2 day rally was extreme. It is therefore unsustainable and climactic. The bulls are probably exhausted. That means that the Emini might have to go sideways more today, like it did for most of yesterday.
Can today form a big bear trend day? After a strong reversal up for 2 days and with magnets above, day traders are expecting more sideways to up trading.
Yesterday’s setups
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. I rarely also show limit order entries and entries on the close of bars. I do not want the lines to be distracting. If they are longer, I make them dotted. But, they have to be visible, so I make the shorter ones solid. Buyers of 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.
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
The EURUSD Forex market on the daily chart turned down yesterday from a small lower high. That lower high is the right shoulder in a 3 week head and shoulders top. But the rally in June was especially strong. Therefore, this selloff is more likely a pullback from that rally than the start of a bear trend.
The minimum targets for the bears are the EMA and the June 3 low. That is the final leg up in the 3 week buy climax.
The trading range in April and May was a head and shoulders bottom. After a reversal up from a bottom, there is often a pullback to the breakout point. That is the top of that trading range, which is around 1.10. This pullback might continue down to that level before the bulls buy again. They want a 2nd leg up after their strong 3 week rally.
The daily chart has been sideways for 3 weeks. Traders expect it to get to the June 3 low before the bulls might buy aggressively again.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market had a small rally early in the overnight session, but then sold off to a new low. It will be difficult for the bulls to create a strong rally until after the selloff reaches the June 3 low. The incentive just isn’t there. Why buy above that level when traders know that it is a strong magnet and they can probably buy lower?
Can the EURUSD collapse below the June low? That is not what typically happens. Usually there is some buying there. The bears take profits and the bulls begin to buy. If there is strong buying, the bull trend can resume. More often, the chart will spend a few days there deciding if the selloff will continue down to the next support.
The EURUSD has been sideways for 3 weeks. Traders are not expecting a big move up or down. Day traders are looking for scalps, but when there is a strong breakout up or down, they will hold for 30 – 50 pip swings. They know that big trends are unlikely while the daily chart is in pullback mode.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Here are several reasonable stop entry setups for today. I show each buy entry with a green rectangle and each sell entry with a red rectangle. I rarely also show limit order entries and entries on the close of bars. I do not want the lines to be distracting. If they are longer, I make them dotted. But, they have to be visible, so I make the shorter ones solid. Buyers of 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.
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.
End of day summary
Today sold off to a wedge bottom and then rallied to a small wedge top at the earlier high of the day. It reversed back down and closed near the low. That late selloff was bear trend resumption in a trading range day.
Today was an inside day on the daily chart. It is therefore both a buy and sell signal bar for tomorrow. Because of its bear body, it is a weak buy signal bar. The strong 2 day rally reduces the chance of a reversal down. Therefore, the Emini has an increased chance of going sideways again tomorrow.
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. I talk about the detailed S&P Emini futures price action real-time throughout the day in the BrooksPriceAction.com trading room. We offer a 2 day free trial.
Charts use Pacific Standard Time
When I mention time, it is USA Pacific Standard Time (the Emini day session opens at 6:30 am PST, and closes at 1:15 pm PST). You can read background information on the intraday market reports on the Market Update page.
