Emini and Forex Trading Update:
Thursday June 6, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini sold off and then rallied yesterday from an Opening Reversal up from the May 13 low. It was a trading range day.
There are only 2 trading days left to the week. The bulls want the week to close on its high. They therefore only need to keep the Emini sideways today and tomorrow.
They would prefer it to break above last week’s high. This week would then be an outside up bar on the weekly chart. It would therefore be a buy signal bar for next week.
However, the weekly chart has a 5 bar bear micro channel. Consequently, the 1st reversal back up will probably be minor. That means the Emini will probably be mostly sideways for another week or two. This is true even though it will probably go at least a little higher over the next week.
The bears want the rally to form a lower high on the daily chart. But there is no top yet. Also, after the strong 3 day reversal, there will probably be buyers below yesterday’s low.
Since Tuesday was a buy climax, the bulls are exhausted. Yesterday was a trading range day. That increases the chance that today will also be a trading range day. This is especially true since there is not much incentive for the bulls to do more this week. Also, most traders will not sell aggressively after a strong 3 day rally.
Overnight Emini Globex trading
The Emini is up 8 points in the Globex session. It might gap up again for the 3rd consecutive day. However, strong rallies on the 5 minute chart typically have a pullback by the end of the 3rd day. Consequently, the odds of bull trend day are less. Day traders will be more willing to look for tops on the 5 minute chart, expecting at least a couple hours of sideways to down trading.
This rally is testing the late 2019 triple top of 2828. That area has been important support and resistance for 18 months. Therefore, the Emini will probably begin to stall here for at least several days.
Can today break far above that resistance today? Probably not. The Small Pullback Bull Trend on the 60 minute chart now has 15 bars. That is relatively unusual and therefore climactic. It will begin to attract profit takers and some shorts. The odds of a pullback are increasing.
Since the June 19 FOMC announcement is more important than usual, the Emini will probably begin to enter a trading range for the next 2 weeks.
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 reversed down yesterday from its break above the month-long trading range. However, it is reversing back up today. Traders are deciding if yesterday is a reversal or a pullback.
Yesterday was an outside down day. But today is now an outside up day. This is a consecutive outside day pattern, which is a reliable buy signal for tomorrow. It will be stronger if today closes above yesterday’s high.
Because of the yearlong bear channel, the bears want a reversal down. Every prior rally has reversed down within 2 – 3 weeks.
However, a bear channel has a 75% chance of an eventual successful bull breakout. Consequently, one of these breakout attempts will probably be the start of a bull trend that will last many months.
The bulls need consecutive closes above the March 20 major lower high to end the bear channel. Until then, the odds continue to favor bear rallies and reversals down after 2 – 3 weeks.
Legs in trading ranges tend to go beyond minor support and resistance before reversing. The April 12 minor lower high is just above. This rally might have to get above that high before the bears will sell aggressively.
Since the June 19 FOMC meeting is more important than usual, all financial markets might begin to go sideways into that report. Then, on the report, traders would decide on the direction of the next move.
Overnight EURUSD Forex trading
Yesterday was a bear sell signal bar on the daily chart for a failed breakout above a trading range. By today going below yesterday’s low, the sell signal triggered.
However, there were far more buyers than sellers below yesterday’s low. The EURUSD 5 minute Forex chart rallied 100 pips in the past hour. This increases the chance of higher prices today.
The bulls do not need higher prices today. Their goal will be to have today close near its high. Today is already an oo buy setup for tomorrow (consecutive outside bars). It will be more reliable if today closes above yesterday’s high and around today’s high. Traders tomorrow would then be more eager to buy above today’s high, looking for at least several days of higher prices.
The bears hope that today’s rally is simply a pullback from triggering the sell signal on the daily chart this morning. However, today’s rally is strong enough to make a reversal down on the 5 minute chart unlikely today. Traders will buy pullbacks and be more willing to hold part of their long positions overnight.
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
Today broke above yesterday’s high, but it was a small trading range day until late. It then broke strongly above last week’s high. This week is therefore an outside up week and a buy signal bar on the weekly chart for next week.
Because the buying is extreme, it is climactic. The odds therefore favor a 1 – 2 day pullback within the next few days. However, the 4 day rally is strong. Consequently, the bulls will buy the pullback.
Tomorrow is Friday. Therefore weekly support and resistance are important. The most important price is last week’s high. If the bulls close above that high tomorrow, this week will be stronger buy signal bar on the weekly chart for next week.
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.
The correction from the May first high is a pretty good looking ABC on the daily chart with A and C fairly close to equal. What are the odds that is the whole correction?
That’s what everyone wants to know. This is similar to the late December rally. However, the 4 doji bars on the weekly chart make a pullback likely after 1 – 2 more weeks sideways to up. If next week closes on its high, then there will probably not be a test down before a new all-time high.