Emini consecutive bear days after June island top

Emini and Forex Trading Update:
Monday June 15, 2020

I will update again at the end of the day.

Pre-Open market analysis

The Emini gapped down last week and formed a 4 day island top on the daily chart. There was a big bear day on Thursday and another bear day on Friday.

Friday was the 4th day in the pullback. Every other pullback in the 3 month rally ended no later than the 3rd day.

This is probably the start of a swing down. There is now a lower low double top with the February high. Also, the Emini has been in a trading range for 2 1/2 years. The 3 month rally was a test of the top of the range.

If this is the start of a bear leg, it will probably continue down about 15% to around 2700. The bulls want the bear reversal to fail, but need to get at least a couple strong bull bars this week. Without that, traders will expect lower prices. However, since the selloff will be a bear leg in the 2.5 year trading range and not a bear trend, it will have strong bounces along the way.

Last week was an outside down week in a buy climax. It is therefore a sell signal bar on the weekly chart for this week.

Overnight Emini Globex trading

The Emini is down 60 points in the Globex session. It will therefore gap down below Friday’s close. It might even gap below last week’s low. If it does, the gap on the weekly chart will be small. Most small gaps close. Traders would look for a test of Friday’s low, which is last week’s low, in the 1st hour today.

Can today be another big bear day? With a gap down on the weekly chart, there is an increased chance that this week will be a big bear bar on the weekly chart.

If it is, there will probably be at least a couple big bear days on the daily chart. A selloff from a parabolic wedge rally usually tests the start of the wedge rally. That was the May 19 low around the 2900 Big Round Number.

However, the selling has been extreme. Also, after 3 bear days, many bears will be looking to take some profits. There is now a 2 day trading range on the 60 minute chart. Today will open near the bottom of that range. This reduces the chance of a big selloff today. More likely, the Emini will continue that range and probably bounce for a couple days this week.

Friday’s setups

Here are several reasonable stop entry setups from Friday. 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 is turning down from a buy climax. Traders expect a minimum of 2 legs sideways to down. In addition, they believe the selloff will reach the EMA and the bottom of the final 2 day buy climax, which is 1.1167.

Last week is a weak sell signal bar on the weekly chart. This week will probably trade below last week’s low to trigger the minor sell signal. However, because the reversal down will probably be minor, there might be more buyers than sellers below last week’s low. Remember, traders are expecting at least 2 legs down. They therefore expect at least one brief rally along the way.

The bulls want a double bottom bull flag with the June 9 low and a resumption of the bull trend this week. Most traders expect at least a small 2nd leg sideways to down. They will therefore sell the 1st bounce.

There is only a 30% chance of a rally this week that goes above last week’s high without at least a 2nd leg sideways to down.

Overnight EURUSD Forex trading

The 5 minute chart of the EURUSD Forex market has been in a 40 pip trading range overnight. Day traders are looking for 10 – 20 pip scalps up or down. They know that 2 legs sideways to down are likely. Therefore, they expect a bounce for a day or two this week. But they will sell the rally, expecting a test of the June 3 low.

Any day can suddenly break into a trend. But the bulls will probably need a buy signal bar on the daily chart before the 5 minute chart can have a trend up. That reduces the chance of a bull trend day today.

Last week is a weak sell signal bar on the weekly chart. There will probably be buyers below its low. That reduces the chance of a strong selloff from here.

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 opened below last week’s low. That triggered the weekly sell signal. The gap down was small and it closed within the 1st few minutes. Today then rallied strongly to above Friday’s lower high. It failed to get above Friday’s high and form an outside up day.

There have not been 4 consecutive bear days since February. After 3 consecutive bear days, today was likely to close above the open. It closed near the high and it is a High 1 buy signal bar for tomorrow.

However, after a surprisingly strong 3 days down, traders expect a 2 – 3 day bounce to a lower high and then a 2nd leg sideways to down.

If tomorrow gaps up, there will be a 3 day island bottom. While good for the bulls, island tops and bottoms are usually minor reversal patterns.

See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.

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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.

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