Emini and Forex Trading Update:
Monday June 8, 2020
I will update again at the end of the day.
Pre-Open market analysis
The Emini rallied strongly all last week. While the rally is a buy climax, there is no top yet. Traders expect at least slightly higher prices.
The next target is the 3219.75 close of 2019. Above that is the gap above the February 24 high of 3248.75.
Since the rally is very strong, traders will buy the 1st 1 – 3 day pullback, like they have done since the March low. The bears want at least a micro double top or a surprisingly big reversal before looking to sell.
The bulls who bought in February are relieved that they can now exit around breakeven. Those who bought at the bottom in March will want to take some profits. Consequently, the rally will likely stall around the February all-time high.
That means the Emini will probably enter a trading range for a week or two. When there is a trading range on the daily chart, there is more trading range price action on the 5 minute chart.
Overnight Emini Globex trading
The Emini is up 20 points in the Globex session. It will probably open around last week’s high. There are magnets just above and the bull trend is strong.
While traders expect at least slightly higher prices, the Emini is now in a zone where the bulls will begin to take some profits Also, last week’s 200 point rally was exceptional. It is therefore unsustainable and climactic. That will probably make the bulls less eager to buy. Some will begin to take profits.
While traders expect at least slightly higher prices, the next several days will probably start to go sideways. That means that day traders will look for more swings up and down. Last week’s strong rally will probably evolve into a trading range this week.
EURUSD Forex market trading strategies
The EURUSD Forex market on the daily chart formed a bear reversal bar last week. It followed a pair of big bull bars. They probably represent a blow-off in a strong rally.
Traders expect a pullback to at least the bottom of those 2 bull bars soon. There is often on more brief leg up before the pullback.
The bulls obviously want a break above the March high. However, it is more likely that enough bulls will use this as a good opportunity to take some profits. It is therefore more likely that the EURUSD will pull back to below 1.12 before going above the March high at around 1.15.
Overnight EURUSD Forex trading
The EURUSD Forex market traded below Friday’s low overnight. This triggered the sell signal on the daily chart.
However, it only dipped a little below Friday’s low and then reversed up. The bulls want today to close near its high. It would then be a High 1 bull flag buy signal bar for tomorrow.
Remember, where there is an exhaustive buy climax, there is often one more leg up before there is a pullback to the bottom of the buy climax. The chart often goes sideways for many bars before deciding whether to have that additional final leg up or begin to pull back.
Eight consecutive bull bars on the daily chart is a sign of extremely strong bulls. There will probably be at least a few sideways days before the bears can get a reversal down to 1.12.
When there is indecision, there is confusion. Daytraders tend to take quick profits. Furthermore, since they expect small moves up and down, they look to buy low and sell high. This typically results in a trading range. There is therefore an increased chance of trading range trading for a few days.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
The Emini reversed up after a wedge selloff to the EMA on the open. It rallied in a bull channel and broke above the close of last year. The Emini is now positive on the year.
There is a gap above the February 24 high on the daily and weekly chart at 3248.75. That is the next target.
But, as strong as the the 3 month rally has been, there still might be a 10 – 15% pullback before a new 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.
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.
You mention a gap above the Feb 4 High 3248.75 as the next target … can you further explain where that gap is on the daily and weekly chart and why that is a target? Thanks
Read the weekend report for a better understanding.
Feb 24 not Feb 4, the high of that day when it gapped down from previous week was 3248.75
That was my typo. I meant February 24.