Emini and Forex Trading Update:
Thursday June 25, 2020
I will update again at the end of the day.
Pre-Open market analysis
Yesterday crashed on the 5 minute chart. On the daily chart, it triggered a lower high major trend reversal sell signal.
Today is important. If today has a bear body on the daily chart, traders would see that as confirmation of yesterday’s bear breakout below the 7 day tight trading range. They then will look for lower prices. Also, they will begin to believe that the 15% correction of the 3 month rally has begun.
Alternatively, if today closes on its high, they will conclude that the bear breakout failed. They will again look for a test of the gap on the weekly chart above the February 24 high.
It is important to note that the stock market has a bullish bias from June 26 to July 5. We enter that window tomorrow. Therefore, there might not be too much left to the selling.
Monthly support and resistance
There are only 4 trading days left in June. Yesterday dipped back below the open of the month. That might be a key price for the remainder of the month. If June closes below its open, it will have a bear body. Traders will see June as a sell signal bar on the monthly chart. This is especially true if June closes on its low.
Yesterday also spent 5 hours oscillating around a 10% pullback from the all-time high. When the Emini is below 3034.80, it is in correction territory. It closed just above that price yesterday.
Overnight Emini Globex trading
The Emini is down 29 points in the Globex session. It might gap below yesterday’s low.
However, there is still a 50% chance that the 2 day selloff is only a bear leg in a trading range. Yesterday broke below the 7 day tight trading range, but the Emini is still in a 4 week trading range. The bulls might be waiting for a test of the June 15 low before buying aggressively again.
Today’s should tell traders if yesterday’s breakout will succeed and lead to a test of the June 15 low. If today is a bear trend day, traders will look for a test of the June 15 low next week.
But if today rallies, traders will expect follow-through buying over the next several days and a break above the 7 day tight trading range.
Yesterday crashed, but then entered a trading range for several hours. A trading range late in a bear trend is often the Final Bear Flag. That increases the chance that the Emini today will work back up into yesterday’s trading range at some point today.
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 so far is forming a 2nd consecutive bear day. I said last week that the rally from the double bottom with the June 3 low would probably reverse down from a double top with the June 16 high. Then, traders would decide if there would be a test down to the breakout point, which is the May 1 high.
A pullback to a breakout point happens more often than not. Consequently, while the past 3 weeks are still forming a bull flag, there is a slightly higher probability of a test down to the 1.10 area before another attempt to go above the March high.
But if today or tomorrow reverses up strongly from the June 3/June 19 double bottom, the odds will again shift in favor of the bulls.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market has been selling off in a tight bear channel overnight. Day traders are only selling because the bulls have been unable to make money.
The selloff is getting near the June 3/June 19 double bottom. This should make bears begin to take profits. If they do, the overnight bear trend will evolve into a trading range. Day traders will switch to selling rallies instead of at the market. Also, if there is a 20 – 30 pip bounce, day traders will begin to buy reversals up from the low for scalps.
A Small Pullback Bear Trend like this does not usually immediately reverse into a bull trend. Consequently, the best the bulls can get over the next few hours is a trading range. After a couple hours of sideways trading, they will have a 30% chance of a bull trend reversal into the end of the session.
While the overnight bear trend has been strong, the EURUSD is now near the bottom of a 3 week trading range. It is probably going evolve into a trading range within an hour or so.
The bears hope that it will continue down far below the June double bottom. However, the lack of big consecutive bear bars means the momentum down is not very strong. Therefore, a trading range is currently more likely than a strong breakout below the double bottom today.
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 sold off on the open but reversed up from a sell climax below the open of the month and yesterday’s low. There was a double bottom higher low major trend reversal. The Emini was sideways for several hours and the bulls got strong trend resumption up in the final hour.
Today is a bull day and a buy signal bar on the daily chart. There is a failed breakout below the 7 day tight trading range. Also, the Emini is entering a seasonally bullish window. It will probably trade higher 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.
