Emini and Forex Trading Update:
Friday June 19, 2020
I will update again at the end of the day.
Pre-Open market analysis
Yesterday traded below Wednesday’s low. That triggered a minor sell signal on the daily chart for a lower high. But the 2 day rally preceding it was strong. Therefore, yesterday was more likely a pullback from the 2 day rally than a reversal down from a lower high.
Since yesterday had a bull body, it is a High 1 bull flag buy signal bar for today. But after 3 sideways days in the middle of a 3 week trading range, this is a minor buy signal. While the Emini will probably trigger the buy signal today, it might simply continue sideways instead of trending up strongly today.
Today is Friday so weekly support and resistance can be important
Today is Friday and therefore support and resistance on the weekly chart can be important. This is particularly true in the last hour.
The Emini currently is forming a High 1 bull flag buy signal bar on the weekly chart. If the week closes near the high of the week, it will be a stronger buy signal. Therefore, the bulls will try to get the week to close near the high of the week. That would make at least slightly higher prices likely next week.
Overnight Emini Globex trading
The Emini is up 38 points in the Globex session. It will therefore open far above yesterday’s high. The daily chart is in a bull trend so traders expect higher prices.
But when there is a big gap up, the Emini is far above the EMA. That is the average price. Traders do not like to pay a price that is far above average unless the bars are far more bullish than average.
Therefore, unless there are a couple big bull bars closing near their highs within the 1st few bars, traders will expect a trading range open. That happens about 80% of the time. The Emini goes sideways until it gets closer to the EMA. At that point, the bulls look to buy either a double bottom or a wedge bottom.
The bears want a strong bear trend from the open. But if today is going to be a bear day, it will most likely begin from a double top or wedge top and a trading range open.
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 today has a bull body on the daily chart. There are 2 small legs down from the June 10 top of a strong rally. The bulls hope that today will close near its high. Today would then be a High 2 bull flag buy signal bar for Monday.
However, when there is a reversal from a buy climax, the selloff typically reaches the bottom of the most recent buy climax. That is the June 3 low. Therefore, if there is a rally next week, it will probably fail around the June 16 high.
There would then be a small double top. That double top would be a lower high. Traders would then conclude that the 2 legs down to yesterday’s low was a complex 1st leg down. They would then look for a 2nd leg down from that small double top.
What would make traders conclude that yesterday was the end of the 2 legs down and that the bull trend was resuming? A breakout above the June high would do it. Also, for many traders, a rally that went 20 or 30 pips above the June 16 lower high would be enough.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market went sideways overnight around yesterday’s close. But is has rallied over the past hour. While today could continue up, all the bulls need is for today to close near its high. It would then be a good buy signal bar on the daily chart. Next week would then probably trigger the buy signal. Traders would then look for a test of the June 16 lower high.
Can today reverse back down? The rally is strong and the context is good for the bulls. Today should either work higher or enter a trading range.
This will make it difficult for the bears to make much money. Day traders are buying. If the rally evolves into a trading range, day traders will switch to buying pullbacks and looking for scalps. Also, the bears will then sell reversals down from scalps.
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 gapped up and sold off to below yesterday’s low. Today was an outside down day.
The bulls tried to get back above yesterday’s low but failed. The Emini collapsed into the close. It is a big bear outside down bar and a sell signal bar for next week. There is now a 50% chance that this week’s lower high is the start of a 15% correction.
Even though today’s selloff was dramatic, the Emini is still in its 4 day trading range. Also, the week closed above its midpoint. This week is therefore a weak High 1 bull flag buy signal bar for next week. The bulls still have a 50% chance of the rally continuing to above the February 24 high. That is the gap on the weekly chart.
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.
What is the main reason for selling on the low of bar5?
We have a micro DT on bar3, so why not selling on the BO of low of bar3 on bar4?
Both entry is during the entry bar before closing, so both have a bear signal bar, and both have opposite reason for not selling (bar3 due to tail on bar1 and doji on bar2, and bar5 due to bull bar on bar4).
Thanks.
Although I had sold on Low of Bar 3. I guess Al hasn’t marked selling on L of bar 3 or Bar 4 because the market was still in TR and that would have been selling at the low of TR expecting that BO would succeed.. While selling below bar 5 is selling at the top of the TR after DT.
Just my guess though..
As a general rule, if there is a gap up and a Low 2 top, it is a credible short. It would have been more convincing if it closed on its low.
Al,
Is there anything in particular we should be looking for with today being a quadruple witching day? Or is that overrated and not to be worried about?
Thank you
It was a big deal 30 years ago, but not so much now. The computers started the process several days ago. It usually is a non-event.