Emini and Forex Trading Update:
Tuesday June 18, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini formed a 4th consecutive doji bar in a tight trading range. The daily chart is in Breakout Mode ahead of Wednesday’s FOMC meeting. Consequently, the odds of a bull breakout and of a bear breakout are 50%.
The news keeps saying that the market is pricing in only a 20% chance of a rate cut on Wednesday. I suspect that it is higher than that because the chart is now in a 50-50 mode.
But, the 50-50 has to do with the direction of the breakout and not the rate cut. The breakout can be up or down whether or not there is a rate. No one knows how many dollars are ready to buy or sell. We will find out at 11 am PST on Wednesday.
The breakout can come before the report, but whatever happens after the report will overwhelm what happens before. At the moment, day traders are scalping, betting on more sideways price action.
Overnight Emini Globex trading
The Emini is up 17 points in the Globex session. It will therefore probably gap above the 4 day tight trading range and test last week’s high.
Is this the start of a rally to a new all-time high? It might be if the bulls get a trend day after the gap up. However, if the rally reverses down from the gap up, then traders will see a double top with last week’s high.
Whenever there is a big gap up, there is an increased chance of a trend day. Up is slightly more likely than down. However, there is an 80% chance of at least one reversal in the 1st hour. The chart typically enters a trading range until it gets near the EMA. The bears want a double top or wedge top and an early high of the day. But the bulls will try to create a wedge bottom or double bottom around the EMA. If there is a trend, day traders will swing at least part of their positions.
The bears want a double top or wedge top and an early high of the day. But the bulls will try to create a wedge bottom or double bottom around the EMA. If there is a trend, day traders will swing at least part of their positions.
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 has been in a bear channel for a year. Channels spend a lot of time in trading ranges. The daily chart has been in a trading range for 4 months. Every trading range has both a buy and sell signal. Furthermore, traders expect reversals instead of successful breakouts.
Every leg up and down over the past year has reversed within about 3 weeks. The bears have had a leg down since last week. By going below last week’s low overnight, the weekly chart triggered a weekly sell signal.
However, unless the selloff continues to below the May low, the bulls still have a possible buy setup. A reversal up from a higher low would be a head and shoulders bottom, a double bottom pullback, and a higher low major trend reversal.
What will happen if the bears break to a new 52 week low? Probably nothing different from all of the other new lows over the past year. The bears will take profits and the bulls will buy. Both will expect a 2 – 3 week leg up.
Overnight EURUSD Forex trading
The EURUSD 5 minute chart sold of sharply in Europe last night. It has been in a trading range since. Because of the trading range, both the bulls and bears have been scalping for 10 pips.
The bears want trend resumption down today. However, they are now exhausted, as evidenced by the 5 hour tight trading range. But if they begin to form a series of 3 or more bear bars closing near their lows with bigger than average bodies, day traders will expect at least a small 2nd leg down today.
Because of the possible buy setup on the daily chart, the bulls want a reversal up today or tomorrow. They will probably have to wait until after tomorrow’s FOMC report. The bars are currently small. There is very little buying pressure, and therefore a significant reversal up today is unlikely.
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
The Emini rallied strongly on the open, but then entered a trading range. The past 4 days had mostly trading range price action.
Traders are waiting for tomorrow’s 11 am PST FOMC interest rate announcement. It is more important than usual. There is therefore an increased chance of a big move up or down after the report.
Prior to the report, day traders will trade like on any other day. But, they should exit their positions ahead of the report. Since the initial move reverses more than half of the time, day traders should wait at least 10 minutes after the report before resuming trading.
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.
