Emini and Forex Trading Update:
Wednesday June 12, 2019
I will update again at the end of the day.
Pre-Open market analysis
I have been saying since the weekend that there would be a pullback this week. This is because the Emini was testing the major May 16 lower high. Furthermore, there was a parabolic wedge buy climax on the 60 minute chart. Finally, all financial markets will probably pause ahead of next week’s FOMC announcement.
Yesterday was an outside down day. Since there is now a double top with the May 16 high, yesterday is a sell signal bar for today. But after a 6 day rally, the odds are that there will be buyers not far below yesterday’s low. If today triggers the sell signal, the selloff will probably last only 1 – 3 days before the bulls buy again.
Overnight Emini Globex trading
The Emini is down 5 points in the Globex session. Today therefore might gap below yesterday’s low and the 60 minute EMA.
By trading below yesterday’s low, the Emini would trigger a minor sell signal on the daily chart. Yes, there is a double top with the May 16 high. But the 6 days without a pullback make the 1st reversal down likely to be brief. The bulls will probably buy a 1 – 3 day pullback and try again to work to above the all-time high.
While yesterday was an outside down day, the final 4 hours were in a trading range. In addition, the 60 minute chart has been above its 20 bar moving average for far more than 20 bars. The bulls have been willing to buy far above the average price. There will be many bulls happy to finally get to buy around the average price. This 20 Gap Bar buy signal reduces the chance of a strong reversal down over the next few days.
Since there is a sell signal on the daily chart and a buy signal on the 60 minute chart, the Emini will probably be mostly sideways for a few days. That increases the chance of trading range price action on the daily chart. Traders will therefore look to buy for reversals up after 2 – 3 hour selloffs and sell reversals down from 2 – 3 hour rallies.
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. Buyers of the Brooks Trading Course have access to a much more detailed explanation of the swing trades for each day.
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.
EURUSD Forex market trading strategies
The EURUSD daily Forex chart is still on Friday’s consecutive outside bar buy signal. The odds favor at least a small 2nd leg sideways to up after a pullback.
But, there is now a micro double top with Monday’s high, a double top with the April 12 high, and a wedge bull channel. The odds favor a 3 – 5 day pullback. This is especially true ahead of next Wednesday’s unusually important FOMC announcement.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart tested Monday’s high and reversed down from a perfect double top. This is a micro double top on the daily chart. While the reversal down has only been about 40 pips, it is enough to increase the odds of lower prices over the next few days.
The bears want today to close below the open. Today would then be a stronger sell signal bar on the daily chart. It would increase the chance of a test down to the June 6 low. That is the bottom of the consecutive outside up bars. They will therefore sell 20 – 30 pip rallies today, especially when the rallies are above the 1.1326 open of the day. Furthermore, they would like the day to close on the low. Today would then be a stronger sell signal bar.
Because the bulls have been unable to break strongly above the April 12 high, they know a pullback is likely. They want to minimize the size of the pullback. They especially do not want traders to see the pullback as a resumption of the bear trend on the weekly chart. Consequently, they will buy selloffs and try to prevent today from closing near its low.
Importance of Friday’s close
The bulls want this week to close above the 1.1322 open of the week. This week would then have a bull body on the weekly chart. That would confirm last week’s bull breakout and increase the chance of higher prices over the next few weeks. Consequently, they will buy dips below 1.1322 all week.
The bears always want the opposite. They therefore want this week’s candlestick to have a bear body. That would increase the chance that last week’s bull breakout will fail. There have been no consecutive closes above the 20 week EMA in over a year. Each test above the average has failed. The bears want their bear channel to continue.
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. Buyers of the Brooks Trading Course have access to a much more detailed explanation of the swing trades for each day.
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.
End of day summary
By breaking below yesterday’s low, the Emini today triggered a sell signal on the daily chart. But that chart has a 6 bar bull micro channel. The sell signal is therefore minor. Traders expect it to last 1 – 3 days.
Today sold off for the 1st half of the day. It then reversed up from a wedge bottom at the 60 minute EMA. The rally was weak and the day remained a trading range day.
It is a pullback in a bull trend. Today therefore is a High 1 buy signal bar for tomorrow.
However, it was a bear bar. In addition, yesterday’s outside down bar will probably get more of a pullback. Finally, the parabolic wedge buy climax on the 60 minute chart will probably get more of a 2nd leg down. Consequently, there will probably be more sellers than buyers tomorrow above today’s 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.
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 Intraday Market Update page.
