Emini and Forex Trading Update:
Wednesday June 10, 2020
I will update again at the end of the day.
Pre-Open market analysis
Yesterday sold off on the open but reversed up from below Monday’s low. It again tested the close of 2019, but closed near the open. Yesterday was a bull doji candlestick on the daily chart.
The bull trend on the daily chart is strong. The gap above the February 24 high on the daily and weekly charts is the next magnet above.
The Emini is near enough so that it will probably get there within a week or so. But will it continue up to a new high? Despite the strong rally, the odds still favor a pullback for several weeks before a new high. However, one or two big bull days will make the new high more likely.
Today is an FOMC day. No one expects any surprise from the Fed. However, there is usually a strong move up or down after the 11 am PST report.
Overnight Emini Globex trading
Yesterday was a pullback in a strong bull trend. It is therefore a High 1 bull flag buy signal bar. The Emini is up 8 points in the Globex session. Traders expect it to trade above yesterday’s high and trigger the bull signal. They also expect the rally to reach the gap above the February 24 high this week.
But the rally has been exceptionally strong. Stops for the bulls are far below so risk is great. Traders will soon begin to take some profits to reduce their risk.
The strong rally on the daily chart should evolve into a trading range. A trading range on the daily chart typically results in more trading range price action on the 5 minute chart.
Today’s 11 am PST FOMC announcement is a catalyst for a surprisingly big move up or down. Day traders should be out of positions ahead of the report. Most FOMC announcements result in sharp moves up and down within the first few minutes. Day traders should wait at least 10 minutes after the announcement before resuming trading.
They should treat the market at that point as if it is the start of a new day. They need to be ready for anything, including a strong trend up or down, or a big reversal.
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 broke above a High 1 bull flag buy signal bar yesterday. However, the 2 big bull bars last week is probably an exhaustion move.
There would normally be a 70% chance that a minor reversal down will begin this week. However, today’s FOMC meeting makes it a little less likely, so maybe there is a 60% chance.
The target for the minor reversal down is the bottom of the most recent buy climax. That is the low of last week’s 2 big bull bars. It might take a week or so to get there once a reversal begins.
The rally has been very strong. Traders expect a break above the March high after the pullback. There is a 40% chance that the breakout will come without more than a 3 day pullback.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market reversed down after briefly breaking above last week’s high. Therefore bulls were taking profits and bears were selling the breakout. This increases the chance of a small double top with that high.
Day traders will look to sell reversals down from the high, betting on the small double top. Since there has not been a strong reversal down, the bulls will keep buying selloffs, hoping to be able to get today to close far above last week’s high.
Today’s FOMC meeting at 11 am PST is a potential catalyst for a big move up or down. Day traders should exit positions ahead of the report. Furthermore, there is typically a quick move up and down immediately after the report. Therefore, day traders should wait for at least 10 minutes after the report before trading again.
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 on the open and reversed up from a wedge bottom just below the 60 minute EMA. It was then sideways ahead of the 11 am PST FOMC announcement. It rallied on the report, but reversed down for a 3rd day at the close of last year. It finished the day near low of the day.
Today was the 2nd day of a pullback. Every pullback since March ended by the 3rd day. Each was a pullback, which is a bull flag. Consequently, traders expect this pullback to be a bull flag. The buy signal triggers when a day goes above the high of the prior day. With today having a bear body on the daily chart, it is a weak buy signal bar for tomorrow.
Traders expect the rally to test the gap on the daily and weekly chart above the February 24 high. If the bulls get a couple big bull days, the rally will probably continue up to a new high.
Currently, it is more likely that the Emini will stall around the gap and then pull back for several weeks. The bears will need a couple big bear days to convince traders that this week is the start of the correction.
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.
Hi Al, just curious as to how you saw the PA differently as to sell below 8 (a bull bar) however not below 60 (also a bull bar). Thank you
Hi James,
Al did mark a short below 60 (or rather 61), which was triggered as bar 63 went down. Trade followed the Micro Double Top after the 2nd leg up and Buy Climax. See today’s Daily Setup chart for this detail if you have access.
Hi Richard, to my point exactly, the sell below 61 was a bear bar and is what I typically see recommended by Al (selling below a bear bar), however I rarely see Al recommend selling below a bull bar which he did at bar 8. I was curious as to what made this situation unique to sell below a bull bar. thank you.
To add I did look at the EOD review by Al, and I see he noted the strong magnet below [globex low,] so maybe any L1 at that point was good enough reason to short.
Hey Al
Just curious did you take the double top bear flag sell at the end of the day? I felt the bull bars up were too strong to sell
The price action today was amazingly easy to read and the day was filled with good stop entry setups (except for the tight trading range ahead of the report).
My last trade was buying the wedge selloff to the double bottom at 12:05 pm PST. I made enough points to relax, and I did not sell that wedge rally to the double top bear flag at 12:35 pm PST. But if I was your age, I probably would have!
Was the inability of the bears to make a new low at the end of the day important?
Everything is important. I believe it was because there was already a bull breakout above the 18 bar range. When that is the case, there is more aggressive buying just above the low. Only 10-20% of days break above and then below. Many try , but fail. Today was an example.