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Emini testing at December 2019 close ahead of FOMC

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Emini and Forex Trading Update:
Tuesday June 9, 2020

I will update again at the end of the day.

Pre-Open market analysis

The Emini broke above the close of last year. It is now up for the year.

There is also a gap on the daily and weekly charts around 3250. That is another gap above.

Because the March crash was so severe, there are bulls who bought in February who will be relieved to be able to get out around breakeven. Also, the bulls who bought the reversal up in March will want to take some profits.

This supply might take some time to work through. Therefore, the strong rally of the past couple weeks will probably evolve into a trading range soon. Tomorrow’s FOMC announcement might also lead to trading range trading today.

Overnight Emini Globex trading

The Emini is down 23 points in the Globex session. Traders know that the rally on the daily chart last week was extreme. They expect the bulls to be exhausted. There is therefore an increased chance of the rally evolving into a trading range this week.

It is important to note that even though yesterday was a bull trend day, 68 of the 1st 72 bars were trading range bars. Traders expect more trading range price action today.

Yesterday was a Spike and Channel bull trend. There is typically a reversal down to the start of the channel. That was the pullback at 9:30 AM PST yesterday. Then, the chart usually evolves into a trading range. Today will open around that target. There is therefore an increased chance of a trading range that begins on the open.

Since the buy climax on the daily chart will probably pause this week, there is an increased chance of a couple bear trend days over the next week or so.

Yesterday’s setups

Emini bull channel and positive on the year

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 pulled back for 2 days after a strong rally. This is a High 1 bull flag.

However, there were consecutive big bull bars last week. Because they came late in a bull trend, they probably will attract profit takers. There is often one more brief leg up before the profit taking begins.

It is important to note that there does not have to be a pullback. The rally could continue to far above the March high without more than a 2 day pause. But that would be unusual after last week’s consecutive big bull days.

Once the bulls take profits, the 1st downside target is the bottom of the most recent buy climax. That means the low of those 2 bull bars from last week. That would be about a 200 pip pullback to below 1.12. It would also be a test of the March 16 breakout point.

If the pullback fell further over the next couple of weeks, it could test the May 1 high. That is the top of the 2 month trading range and the neckline of the head and shoulders bottom.

Overnight EURUSD Forex trading

The 5 minute chart of the EURUSD Forex market sold off last night to below yesterday’s low and rallied back to the open. Today so far is a doji bar on the daily chart, like yesterday.

Since yesterday is a buy signal bar, the bulls want today to go above yesterday’s high. That would trigger the High 1 bull flag buy signal on the daily chart.

If it does not, today would be a High 1 bull flag buy signal bar for tomorrow. Traders expect an attempt to resume the bull trend on the daily chart. Therefore either today should go above yesterday’s high or tomorrow should go above today’s high to trigger the buy signal.

But doji bars are weak buy signal bars, especially after a buy climax. Consequently, there might be more sellers than buyers above the buy signal bar.

Can today reverse back down and close on its low? Probably not. Traders are exhausted and the trading over the past 2 days has been quiet. That reduces the chance of a big move today.

If there is a big move, up is more likely because yesterday is a buy signal bar in a bull trend. So far, day traders have been scalping up and down. That will probably continue all day.

Summary of today’s S&P Emini futures price action and what to expect tomorrow

Emini wedge opening reversal then big wedge top

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 small wedge bottom below yesterday’s low. The rally again tested the close of 2019 but the Emini closed near the open. Today was a doji candlestick on the daily chart.

There is an FOMC announcement at 11 am PST tomorrow. No one is expecting any surprise. However, traders always expect a big move up or down after the announcement.

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 Josh,

      You are talking about the cash market. Al’s figures are for the futures market.

      Here are the cash closes for end 2019, with the S&P just 0.22 below what you quoted:

      The Dow Jones Industrial Average DJIA, -1.14% closed up 76.30 points or 0.3%, at 28,538.44, while the S&P 500 index SPX, -0.99% gained 9.49 points, or 0.3%, to 3,230.78. The Nasdaq Composite Index COMP, -0.31% rose 26.61 points, or 0.3%, to 8,972.60.

      • Richard,

        I was looking at the March 20 contract’s Dec 31 close since that was the front month at the time.
        The Dec 19 contract has a close around Al’s level. So the question is what contract would one look at to determine the Close of the year?

        J.

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