Emini forming June lower high major trend reversal

Emini and Forex Trading Update:
Monday June 22, 2020

I will update again at the end of the day.

Pre-Open market analysis

The Emini formed a big outside down day on Friday. That is a sell signal bar for today.

There is now a small double top and a lower high major trend reversal. The bears have a 50% chance of this being the start of a 15% correction. There is still a 50% chance of a rally to the gap above the February 24 high.

But the bears need 2 or 3 big bear bars closing near their lows this week. If instead there are bull bars early this week, the bulls will again try to get above the February 24 high. That is the bottom of the gap on the weekly chart.

Overnight Emini Globex trading

The Emini is up 19 points in the Globex session. After Friday’s midday double top bear flag, the bears want a lower high. They then want a strong break below Friday’s low. However, the Emini has been sideways for 4 days and in the middle of a 3 week range. It is equally likely that Friday is a bear trap and this week will go sideways to up.

Because Friday was a sell climax, there is an increased chance of exhausted bears. That means the Emini will probably spend at least a couple hours going sideways to up early today. The bulls want a breakout above Friday’s double top at around 3105. They would then look for a rally to the top of the 4 day tight trading range.

The bears want a big break below Friday’s low. They then would look look for a test of the 3,000 Big Round Number.

What is most likely? The Emini has been in a tight range for 4 days within a 3 week range. Reversals are more common than breakouts. Day traders expect the sideways trading to continue.

But the weekly chart might be forming a double top with the February high. Traders know that a big move up or down can begin on any day.

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 has been in a trading range for 3 weeks. A trading range always has a reasonable buy and sell signal. The bears have a small head and shoulders top. It is a lower high and at a 2 year bear trend line. The bulls now have a double bottom with the June 3 buy climax low.

When the market is in a trading range, it is neutral. There is about a 50% chance of a bull breakout and measured move up. Also, there is a 50% chance of a bear breakout and measured move down.

Since the EURUSD is now at the bottom of the range, traders expect it to reverse up. But there are 4 consecutive bear bars. A reversal up at this point probably will not break above the June high. However, it might test the June 16 lower high and form a small double top. The bears would try again to break below the bottom of the range.

The EURUSD is trying to reverse up from a double bottom with the June 3 low and a micro double bottom with Friday’s low. Both lows got to within a pip of the June 3 low. I have been saying for 2 weeks that the EURUSD would get here and then decide whether to fall to the next support at the May 1 high or resume up to the March 9 high.

Overnight EURUSD Forex trading

The 5 minute chart of the EURUSD Forex market is testing the support of the June 3 buy climax low. Today tested Friday’s low and reversed up. The bulls want today to be a buy signal bar on the daily chart. They therefore want today to close near its high. Day traders will buy 20 pip selloffs expecting at least a minor rally from the double bottom with the June 3 low.

Traders know that every pip matters. It is not a coincidence that both today and Friday reversed up from a pip above the June 3 low. I have been saying for 2 weeks that the EURUSD would get here.

The bears want today to fall at least a few pips below that low. Traders would then begin to believe that the double bottom will fail. That would increase the chance of a move down to the May 1 high of 1.1018 at the top of the April/May trading range.

The bears want the bear breakout. Consequently, they will sell rallies today, hoping for a break below Friday’s low early this week.

At the moment, the day’s range and the overnight bars are small. That makes a big trend day unlikely. Day traders will continue to scalp for 10 pips today unless there is a surprisingly big move up or down.

Summary of today’s S&P Emini futures price action and what to expect tomorrow

I will post chart after the close.

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 bears want last week’s lower high major trend reversal to begin a 15% correction. With a 5 day tight trading range in the middle of a 4 week trading range, the Emini is in Breakout Mode.

I said on the open that today could form an early low of the day. This was because Friday was a big outside down day and the next day is often inside. This was especially true with Friday’s close being at the bottom of a 4 day tight trading range.

Today formed an early low, just above yesterday’s low and it remained an inside day. It had a bull body and it closed near its high, which is good for the bulls.

Today is now a buy signal bar for an ioi bull flag on the daily chart. There is still a 50% chance that the rally will continue up to the gap above the February 24 high.

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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