Emini and Forex Trading Update:
Thursday June 13, 2019
I will update again at the end of the day.
Pre-Open market analysis
Tuesday was an outside down bar on the daily chart. It is a sell signal bar for a double top with the May 16 high. Yesterday triggered the sell signal by trading below Tuesday’s low. But after a 6 bar bull micro channel, the reversal down will probably be minor. That means that the pullback will likely last only 1 – 3 days.
Because yesterday was a pullback in a bull trend, it is a High 1 buy signal bar for today. But it had a bear body and it followed a big outside down bar. This is a weak buy setup so there may be more sellers than buyers above its high.
This week triggered a buy signal on the weekly chart. But I said over the weekend that there might be a shortage of buyers above last week’s high. Last week was an exceptionally big bar on the weekly chart. The bulls who buy above its high would put a stop below its low. That is too much risk for many traders, especially at the top of an 18 month trading range. Many traders are hoping for a pullback so that they can buy and have a tighter stop.
With next Wednesday’s FOMC announcement being more important than usual, the Emini might simply go sideways until then. The past 3 days had a lot of trading range price action. That makes trading range price action likely again today.
Overnight Emini Globex trading
The Emini is up 7 points in the Globex session. However, the past 3 days had a lot of trading range price action. Also, yesterday is a weak buy setup for today. As a result, there might be more sellers than buyers above yesterday’s high. This reduces the chance of a big bull trend day today.
Yesterday ended with a double bottom higher low major trend reversal setup on the 5 minute chart. A gap above yesterday’s trading range today would be a continuation of the reversal up. Also, today will probably open near yesterday’s high. These factors reduce the chance of a big trend day today.
Next Wednesday’s FOMC meeting is more important than usual. This increases the chance that the 3 days of trading range price action will continue today.
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 formed an outside down bar yesterday. There is now a double top, a 4 day micro double top, and a wedge rally in a yearlong bear channel. Yesterday is therefore a sell signal bar for today.
But last week’s consecutive outside bar buy signal is more important. Consequently, the selloff over the next few days will probably be minor. This means that a bull flag is more likely than a breakout to a new low in the bear channel.
The pullback could last a week or more and test the June 6 outside bar low. However, at the moment, the odds still favor at least one more leg up to above yesterday’s high within a couple weeks.
The importance of 1.1322
The most important price through tomorrow is the 1.1322 open of the week. If the bulls get the week to close above it, this week will have a bull body on the weekly chart. It would therefore confirm last week’s bull breakout on the weekly chart. That would increase the chance of higher prices over the next couple weeks.
Because it is so important, the bears will keep selling every time there is a rally above it. They want a bear body on the weekly chart. Traders would then suspect that last week’s bull breakout above the 20 week EMA and bear channel will fail.
The bulls will keep buying below, trying to stay near this week’s open. Then, tomorrow, they will try hard to get the week to close at or above this week’s open.
Overnight EURUSD Forex trading
Even though yesterday is a sell signal bar on the daily chart, today so far has not traded below its low. Therefore the bears have been unable to trigger the sell signal.
Even if they succeed during the US session today, the small overnight range represents a lack of enthusiasm. It reduces the chance of a big bear trend today. Day traders have been scalping for 10 pips.
If today’s low remains above yesterday’s low, today will be an inside day on the daily chart. Since yesterday was an outside day, today would be a buy signal bar for an ioi (inside-outside-inside) buy setup.
But after 5 sideways days, there is now a tight trading range. That resists breaking out. The chart might therefore stay sideways into Wednesday’s FOMC meeting.
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 triggered a buy signal today by going above yesterday’s high. However, yesterday was a bear day and it followed a big outside down day on Tuesday. This is a weak buy setup. The result was a trading range day.
Tomorrow is Friday and therefore weekly support and resistance are important. The most important price is the 2894.75 open of the week. This is because this week is the entry bar for a weekly buy signal. The bulls want a bull body this week. However, the bears always want the opposite. If the Emini is within about 5 points of the open in the final hour tomorrow, it will probably test it.
Unless tomorrow is a big trend day up or down, it does not matter much if the weekly candlestick has a small bull or bear body. This is especially true when next Wednesday has an unusually important FOMC meeting. That will override anything that takes place between now and then.
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.
But even with good signal bar you need to consider context where it formed and it was likely bears are going to form DT / L2 set up, which would be bad entry bar for 24 signal bar.
Hi Al,
When you have a good signal bar (like bar 24 today) and the entry bar is a bear bar, how do you adjust your trade management? Does that tell you that you should adjust your targets to a scalp when the entry bar is counter to the signal bar?
Thanks
Daniel
Our numbers appear different. 22 was the B signal bar and it was a bull inside bar in a wedge bottom. However, it was reasonable to B above 25, the bear bar. The weaker a setup is, including the signal and entry bars, the more likely the move will disappoint swing traders. They will be quicker to get out. I often want to swing a trade, but when things do not look good enough and I do not get a strong entry bar or follow-through bar, I will usually get out with a scalp. If instead I get a surprising quick breakout, like above 39, I am more willing to swing part of the position.
Thanks Al