Emini and Forex Trading Update:
Friday June 26, 2020
I will update again at the end of the day.
Pre-Open market analysis
The Emini yesterday reversed up strongly yesterday from Wednesday’s break below the 7 day tight trading range. Yesterday is a buy signal bar for today. The Emini will probably go above yesterday’s high to trigger the buy signal today.
That gap above the February high is a magnet above. With the stock market in a seasonally bullish window from today through July 5, the bulls have a good chance of reaching their goal.
Can yesterday be just a pullback from Wednesday’s selloff? Can today resume Wednesday’s selloff? Not likely. Strong bears would not typically allow the follow-through bar after a bear breakout to be a bull bar closing near its high.
Emini paying attention to weekly support and resistance
The Emini tends to rally from around June 26 to July 5. Also, yesterday was a good buy signal bar on the daily chart. There is an increased chance of a bull trend day today.
The bulls want today to end the week above last week’s high. Remember, last week was a High 1 bull flag buy signal bar on the weekly chart. This week is the entry bar. So far, this week is a doji bar, which is neutral and disappointing for the bulls.
The high of the week is 80 points above the current price. That is probably too far up for the bulls to get there today. They might decide to not even try. If that is the case, their goal would then be to simple have the week close above the open. If the weekly candlestick is going to be a doji, they will try to have it have a bull body.
The bears want the week to close near its low. This week would then be a sell signal bar for a Low 2 top on the weekly chart.
But their problem is the same as the bulls. Their target, the low of the week, might be too far for them to reach it today. If they decide that it is not worth trying, they instead will simply try to get a bear body on the weekly chart. That means they will try to get today to close below the open of the week.
Overnight Emini Globex trading
The Emini is down 5 points in the Globex session. It rallied at the end of the day yesterday to just 1 tick above the open of the week and pulled back. It barely got above the bottom of the 7 day tight trading range and the 60 minute EMA. It will probably open around these magnets today.
Today is Friday so weekly support and resistance can be important. The Emini has been sideways for 2 days around the open of the week, the bottom of the 7 day tight trading range, and the open of the month. So far, this week is a doji bar on the weekly chart. Also, it is in the middle of a 4 week tight trading range. This is a neutral market.
The bulls want the Emini to go above yesterday’s high to trigger the buy signal on the daily chart. But in a neutral market, most attempts to begin trends disappoint traders. Therefore there might be more sellers than buyers above yesterday’s high.
Also, with yesterday’s strong rally stopping 1 tick above the open of the week, traders see that price as very important. There is therefore an increased chance of a trading range today. But the daily ranges have been big and the legs up and down have been big as well. Even if today is a trading range day, there will probably be at least one swing up and one swing down.
Finally, if the Emini is within 20 points of the open of the week in the final hour, traders should watch for a move to the open of the week at the end 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 been sideways for 3 weeks after a strong rally. This is a bull flag, but which is good for the bulls. But it is a lower high in a 2 year bear channel. That is good for the bears.
Every trading range has both a buy and sell signal. This one has both a double top and a double bottom. Traders see this as neutral.
Since the last time that things were clear was during the strong rally to the June high, the bulls have a slightly higher probability of a bull breakout. However, breakouts often test breakout points. Consequently, there might be a pullback to the May 1 high before there is a break above the 3 week range.
No sustained strong movement up or down
The bulls see the past 2 days as a pullback from the June 3 and June 19 double bottom at the EMA. They need a good buy signal bar today to make traders eager to buy on Monday. If today closes on its high, it would be a buy signal bar for Monday.
The bears want a 3rd consecutive bears day, especially one closing on its low. That would increase the chance of a bear breakout next week.
What is most likely? More sideways trading today. So far, today is a small day within yesterday’s range. Additionally, it is trading just about where it opened. It is a doji bar, which is neutral. Since it is within a 3 week trading range, the environment is neutral as well. Traders will probably have to wait until next week to see if either the bulls or bears can generate strong trend bars.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market has been in a 30 pip trading range overnight. Day traders are scalping for 10 – 20 pips.
While it is always possible that there could be a breakout and a trend, it is more likely that today will be simply trying to set the tone for next week. All the bulls need is for today to close near its high. Traders would then see it as a good buy signal bar for next week.
The bears want today to close on its low and below yesterday’s low. That would increase the chance of a bear break below the 3 week range next week.
However, the EURUSD is near the bottom of the range. Legs in trading ranges are more likely to reverse than break out. Therefore, today will probably not close on its low. But unless the bulls get a strong rally, the bears will continue to sell near the high of the day for 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 sold off in a Bear Trend From The Open and then entered a trading range and bear channel. When the selloff is climactic like it was, the Emini typically enters a trading range. That is what happened today.
The week ended as a bear candlestick closing near its low. It is therefore a sell signal bar on the weekly chart for a Low 2 top.
However, the monthly chart is more important at the moment. Tuesday is the final day of the month. The bulls want a 3rd consecutive bull bar. They therefore want June to close above its open. The bears not only want a bear bar, they want June to close on its low. That would increase the chance of lower prices in July.
With the uncertainty of the 3 week trading range and the June close, traders will be open to anything on Monday. But, the Emini will probably not get too far from the open of the month.
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.
Al, in this case, you mentioned that it was not likely that strong bears would let the follow through bar be close at its high, so a strong bear day was not likely.
In this case, how should we interpret it since it turned into a strong bear day? Is it a bear continuation? Or is Friday the second leg the bear leg in a trading range? Thanks.
We still need more information. The market keeps reversing with no follow-through.
By the time the direction is clear, which means 2 – 3 consecutive strong days in one direction, the move will already be more than half over. Traders will keep selling every strong bull close and buying every strong bear close until then.
On the weekly chart, the bears have a good sell set up. Let’s see if they can get a strong downside breakout next week.
Whether we briefly go up to the February gap or not, I still think we are going down to below 2700 and probably to around 2600. Everyone keeps talking about 2800. I see that as a minimum target.
Alright noted, thanks Al, have a good weekend.
Hey Al, can you clarify how the Emini entered a trading range? Is the selloff today not confirmation of the bear breakout from the daily trading range prior to Wednesday’s breakout? Thanks
I see a spike from the open to the bar 17 low. From there it entered a bear channel that continued into the cash close. A bear (or bull) channel is a type of trading range that is tilted instead of flat.
Thanks, I was assuming Al was talking about the daily chart, not the intraday…my mistake.