Emini and Forex Trading Update:
Friday June 5, 2020
I will update again at the end of the day.
Pre-Open market analysis
The Emini briefly broke above the March 3 high again yesterday and it sold off again. But it closed back near the open and formed a doji candlestick.
It is a High 1 bull flag buy signal bar on the daily chart. While a doji is a weak buy signal, the bull trend is exceptionally strong. The bulls have been buying for any reason, and a weak buy signal bar is good enough in a strong bull trend.
The bulls want a new all-time high. The next target above the March 3 high is the close of 2019, which is 3,219.75. The bulls want the Emini to get there. If it does, the Emini will be up on the year, despite a 35% selloff in March.
The Emini could go a little above the March high over the next few weeks, but it probably will not continue up to a new all-time high. It might go sideways around it for several more days before either breaking above or reversing down.
There will probably be about a 50% retracement of the 3 month rally at some point this year. That would be about a 15% selloff. Traders expect that the top is around where we currently are, but the Emini could go sideways or up a little more for several weeks before reversing down.
Overnight Emini Globex trading
The Emini is up 43 points in the Globex session. It will probably open with a big gap up today. This is a breakout above the March 3 lower high.
When there is a big gap up, the Emini is far above the average price. The bulls do not want to pay far above average unless the bars are far above average.
If the bulls get a couple bull bars closing on their highs on the open, today could be a Bull Trend From The Open day. More often, the bulls are hesitant to pay too much above the average price.
The Emini usually enters a trading range for the 1st hour or two. Once it gets closer to the 20 bar EMA, the bulls will look to buy either a wedge bull flag or a double bottom.
The bears know that the bulls prefer to buy near the average price. They therefore look for either a wedge rally or double top in the 1st 2 hours for a possible early high of the day.
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 has rallied strongly for 3 weeks. The rally is unsustainable and therefore climactic. The stop for the bulls is now far below. To reduce risk, many bulls will reduce their position size. This profit taking will cause a pullback soon.
It is important to note that the past 2 bars were the biggest consecutive bull bars of the rally. That typically will attract profit taking. It is an attempt to break above a tight bull channel. This is therefore a parabolic wedge buy climax.
There often is a pause bar and then a brief additional leg up before there is profit taking. However, traders should expect profit taking to begin within the next few days.
When there is profit taking in a buy climax, the 1st target is the bottom of the most recent leg up. That is the low of the 2 big bull bars, just below 1.1200.
The pullback typically has at least a couple small legs down. At that point, the bulls will decide if they should buy again or wait for more of a pullback. Bears will begin to sell for a trade down, betting that the bulls will take some profits.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market rallied again in the overnight session but sold off from above yesterday/s high. The bulls are probably using rallies to take some profits.
It has been much easier for day traders to make money as a bull for 3 weeks. But if the bears can get today to close below the open, there will finally be a bear body on the daily chart. That will make more bulls look to take some profits. Additionally, the bears will be more willing to sell. Day traders will be more willing to sell rallies in addition to buying pullbacks.
Today’s close is important. If the bears can get today to close below the open, traders will begin to expect a pullback to begin within the next few days. If today closes on its low, it would be a sell signal bar on the daily chart for a minor reversal down to Wednesday’s low.
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
The Emini rallied strongly in a parabolic wedge buy climax and then entered a trading range. The breakout above the March 3 high is big enough for traders to look at the next resistance. That is the close of 2019 and the gap above the February 24 high.
Traders expect at least slightly higher prices. Because today was extremely climactic, there might be a pullback for a day or two next week.
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.
reading chart for small timeframe trading is useful. With timeframe going higher(weekly, monthly, yearly, etc.), a fundamental analysis becomes more and more useful.
Been waiting for everyone to turn very bullish again. And for many bears to capitulate. We know too well what happens then. The market is not a straight line up, never has been. I lost from this rally because I was hoping to see this pullback before the new high and totally excluded the probability that we can slice through this resistance like nothing happened. Reminds me again the biggest mistake I have been making as a trader is to hope and to believe. I should erase these words from my vocabulary. We all expected there would be some sellers above 3125 but there was absolutely no pressure. And surely, the magic jobs report, came in exactly when the market was trying to decide so we blew past the resistance like a charm. If this was a climax, there would have been much stronger profit taking, which didn’t happen at all for the last two weeks, so we are going higher until there is a reason to start taking profits ( currently, there is no reason ). And by the way, what an opportunity in some stocks! Hertz went from 0.88 up to 3 usd in a day, thats something!
With today’s price action, is it now unlikely there will be a 15% pullback?
In daily chart, gap up for today and nearly continuous bull bars for a week (except for yesterday)
In weekly chart, three bars with this week largest bull bar. Also could we say it is a wedge top since 13 April?
Would these support the view of a bull climax?
All time high without pullback next week??? Buy buy buy…
That’s the type of comment I’d expect in Stocktwits, not here 🙁
Lol
Can you tell me what type of comment you expect here? Double top, 3 push up, parabolic wedge top, etc? Chart is chart. Up is up. Down is down.
Oh wait… did you take shorts and suffered? I am sorry if so. I already took my stop loss 2 weeks ago.