Emini and Forex Trading Update:
Monday June 17, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini has been sideways in a tight trading range. Last week’s candlestick pattern was a perfect doji bar on the weekly chart. That is neutral. Traders are waiting for Wednesday’s FOMC announcement before heavily committing one way or the other.
The bulls see the strong momentum up in June and hope for a break to a new all-time high. If they get it in June, June will be an oo buy signal bar for July on the monthly chart. May was outside down and June would be outside up. That is a reliable buy setup.
The bears hope that the rally fails here. They would then have a double top with the May 16 lower high. They would like a break below the June low and a measured move down to around 2650.
The math is about the same for the bulls and bears. Because of the strong momentum, the bulls have higher probability. The risk for the bears is less and the reward might be greater. They, then, have better risk/reward.
Both are adequate reasons to be in a position. However, with Wednesday’s report being unusually important, most traders are waiting. The result is 5 sideways days. Day traders expect it to continue up to the report. But if there is a strong breakout in the meantime, they will swing trade.
Overnight Emini Globex trading
The Emini is up 2 points in the Globex session. The daily chart has been in a tight trading range for 5 days. Today will therefore open within that range. That increases the chance of more trading range price action again today.
Traders know that whenever something is likely, the opposite has an increased probability as well. Therefore, because everyone expects a trading range today, there is an increased chance of a big trend.
When there is a trading range, the most common type of trend is a Small Pullback Trend. This is because it looks like a leg in a trading range for the 1st hour or two. If the 5 minute chart begins to create gaps or body gaps, the odds of a trend day will go up. The trend can be up or down.
Friday’s setups
Here are several reasonable stop entry setups from Friday. 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 trading range for 4 months and in a bear channel for a year. A trading range always has both a reasonable buy setup and a reasonable sell setup. The bears have a 3 day selloff from a double top with the April 12 top of the range.
However, the bulls see that selloff as a test of the May low. They have a double bottom with the April and May lows. They will try to stop the selloff this week at around 1.12. That is the bottom of the June 6 consecutive outside bar (oo) buy setup. If they can create a reversal up, they will have a higher low major trend reversal and a head and shoulders bottom.
Weekly chart might be reversing up
It is important to note that the weekly chart 2 weeks ago closed above the 20 week EMA last week and above the bear trend line for the 1st time in 9 months. The bears formed a big bear bar last week. That is a sell signal bar for this week. The bears want another failed rally, like all of the other rallies over the past year.
But if there are buyers around last week’s low, last week might be simply a pullback from the breakout in a new bull trend, and not a resumption of the bear trend. Consequently, what the EURUSD Forex market does over the next 2 weeks is unusually important. It will determine if the bear trend has finally ended or if will will continue for at least a few more weeks.
Bull Trend needs higher lows and highs
If a bull trend on the daily chart began with the May 30 higher low after the April 26/May 23 double bottom, there will be many more bull days than bear days over the next few months. The bulls will begin to form a series of higher highs and lows, which defines a bull trend.
June 6 broke above April 12 so they additionally have one higher high after the May 30 and June 14 higher lows. If they get 2 closes above the June high, the rally will then test the March major lower high. Traders will conclude that the bear trend has ended.
When a bear trend ends, the chart is either in a trading range or a bull trend. If the rally gets 2 closes above the January high, traders will conclude that the chart is now in a bull trend on the daily chart.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart reversed up 40 pips last night exactly from last week’s low. The bulls prevented the weekly sell signal from triggering.
Some of the bulls are swing bulls on the daily chart. They are hoping that today is the start of a bull trend that will continue up for many months and test last June’s high around 1.18. Because the daily and weekly charts have credible bottom patterns, there is an increased chance of a bull trend day today.
The bulls need to keep today from falling below last week’s low, which is also the overnight low. Consequently, they will buy 10 – 20 pip selloffs.
The bears need a break below the overnight low to make the bulls give up. However, the rally over the past 2 hours is in a tight bull channel. The bears therefore cannot even make a 10 pip scalp. If they can stop the rally and create a trading range, bear day traders will scalp. Without that, most day traders will focus on buying pullbacks today.
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 was the 4th consecutive small trading range day in a tight trading range. Traders are waiting for Wednesday’s FOMC announcement.
Traders do not care if the Fed cuts rates or not. All they care about is the direction and strength of the breakout.
While the breakout can come ahead of the announcement, what comes after the breakout is far more important. Until then, traders will continue to scalp as long as there is trading range price action.
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.
