Emini and Forex Trading Update:
Tuesday June 2, 2020
I will update again at the end of the day.
Pre-Open market analysis
The Emini broke above Friday’s high yesterday. That triggered a High 1 buy signal on the daily chart. After consecutive strong months on the monthly chart, the Emini will probably test above the May high in early June. It is currently a few points above the June high in the Globex session.
The most important target is the March 3 lower high. That was the start of the parabolic wedge sell climax. The beginning of a sell climax is always a magnet once there is a reversal up.
I mentioned that the bears will look to sell above the 200 day moving average up to around the March 3 high. Therefore the sell zone is roughly between 3,000 and 3,150. Many traders are waiting for the rally to reach the March 3 high of 3125.75 to start to sell.
Traders think there will be a 50% pullback from the 2 month rally before there is a new all-time high. The Emini will probably trade up at least a little more before the bears will sell.
Overnight Emini Globex trading
The Emini is up 15 points in the Globex session. It will therefore probably gap above yesterday’s high. It might even gap above the June high. It should get above the June high this week.
Even though the rally is climactic, there is no top yet. Furthermore, there is room to the March 3 high above. That is resistance and therefore a magnet. Traders expect higher prices.
Yesterday’s rally was a 2nd leg up from Friday’s dramatic late rally. A rally today would be a 3rd leg up. That would increase the chance of a selloff lasting a few hours on the 5 minute chart. It could last a day or two. However, when there is a bull trend on the daily chart and a magnet above, day traders are more interested in buying pullbacks than selling rallies.
Yesterday’s rally was extreme and therefore climactic. That increases the chance of more trading range price action today. Also, the 2 hour trading range late in the day is a possible Final Bull Flag. That increase the chance that if there is a gap up today, there will be a selloff at some point to close the gap.
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 is rallying up from a head and shoulders bottom. There is usually a pullback to the neckline. That is the May 1 high.
The past 3 days have smaller bodies and prominent tails. That is a sign of hesitation. It increases the chance of a pullback soon.
The bulls would like consecutive closes above the March 27 high. Traders would then start to think that the rally will continue up to the March high without more than a 3 day pullback.
There is a wedge rally to a double top with the March 27 high. That is a common reversal setup. But, there is no sell signal yet.
The bears want a trend reversal down and not just a 3 – 5 day pullback. They will probably need at least a micro double top. Currently, the odds are that the bulls will buy a pullback to the May 1 high.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market rallied to above yesterday’s high overnight. It then entered a tight trading range just above that high.
This is the 3rd consecutive days where there has been hesitation at the high. Traders are becoming less willing to buy at the high. That increases the chance that the EURUSD will have to pull back to find more buyers. It also will encourage bears to begin to short for a minor reversal down.
Daytraders have been mostly buying for 6 days, but they have begun to sell for scalps. Also, they are starting to wait to buy pullbacks instead of buying at the market. Additionally, they are starting to take profits around the most recent high. This increases the chance of a pullback this week.
But, it is still easier to make money as a bull. This will be true until the bears are able to get more than a 30 pip reversal down.
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
Today broke above the May high and then sold off. It reversed up from a parabolic wedge sell climax and rallied back above the May high. There was a Buy The Close rally at the end of the day and the day closed on its high.
On the daily chart, the bull channel is tight and the March 3 high is an important magnet above. Odd favor higher prices, even if there is a 1 – 3 day pullback first.
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.
