Emini and Forex Trading Update:
Tuesday June 1, 2021
Pre-Open market analysis of daily chart
- Emini in strong 16-month bull trend on monthly chart. Even if there is a reversal, it will probably lead to 1- to 2-month trading range, and not bear trend.
- Today is the 1st day of June. The bulls want a gap up on the monthly chart, but that will probably not happen.
- May had a small bear body, and it was therefore a bear doji bar in a strong bull trend. Because it was a bear bar, even though only a doji, it was the 3rd pause in the yearlong tight bull channel. It is therefore a weak sell signal bar for a parabolic wedge reversal.
- Bulls often take profits once there is a parabolic wedge. Increased chance that the rally will stall here or slightly above. For example, if June breaks to a new high but forms a 2nd bear bar, it would be a 2nd sell signal bar for the parabolic wedge.
- On daily chart, Friday was sell signal bar for wedge rally to a lower high double top major trend reversal.
- However, Friday was small and today is going to gap above Friday’s high.
- Wedge rally started with May 14 high. If today breaks above May 28 top of wedge but then reverses again, there would be a new wedge that began on May 25. The bears will still try to get a reversal down from wedge rally to double top with May 7 high.
- Strong trends resist reversing. I have been saying for many months that the rally has been climactic, but that buy climaxes are more likely to continue than reverse. Traders will continue to bet on higher prices, knowing that a 10% correction can come at any time.
Overnight Emini Globex trading on 5-minute chart
- Up 21 points in Globex session.
- Today will gap above Friday’s high.
- Today will open above Friday’s high, which was the top of a wedge.
- Breakout above a wedge has 50% chance of continuing up, and 50% chance of reversing down a 2nd time, usually from another wedge.
- Near top of 2-month trading range and bears want reversal down. With today reversing the 2-day selloff, big bear day is unlikely.
- Bulls want strong breakout to new all-time high, which is top of 2-month trading range.
- Today will probably not break above the May 7 all-time high. Therefore, the bulls are not quite as strong as they could be.
- However, trading range is Breakout Mode, and bulls are reversing last week’s attempt at top. Today will probably be either sideways or up.
- Sideways for 6 days, which increases the chance of a lot of trading range trading again today.
- But if there is a series of strong trend bars up or down in 1st hour, traders will look for trend day.
- Most likely, today will be either sideways to up.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- Last week broke below wedge.
- Wedge rally to double top is reliable top, so good for bears. Bears expect at least a small 2nd leg down.
- Reversal down was only 2 bars, and rally is only 2 bars. This is a small pattern and therefore more likely a minor reversal than a major trend reversal.
- Minor reversal usually results in more sideways days.
- Bears want today to be big bear bar closing near its low. Today would then be a higher probability sell signal bar for tomorrow.
- Strong 2-month rally and most reversals fail so good for bulls. Bulls would like big bull day, but would be happy with anything other than big bear day. If they can stop a reversal, they will expect another attempt to break above Feb 25 high.
- Small day so far, so traders think price is just about right. Increased chance of more sideways tomorrow.
- Breakout Mode so 50% chance of breakout above, and 250-pip measured move up, and 50% chance of reversal down to start of wedge at May 13 low, or bottom of 2-month trading range at May 5 low.
Overnight EURUSD Forex trading on 5-minute chart
- Broke above yesterday’s high but reversed back down to below the open.
- The open and low will be the most important prices.
- The bears want today to become a big bear day closing near its low.
- The bulls want today to close near its middle, or the high.
- Today is a small trading range day. Day traders have been scalping up and down.
- Unless there is a series of strong trend bars, day traders will continue to scalp.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
- Sold off strongly for 90 minutes and then became weak bear channel that evolved into trading range.
- Bear trend from the open, outside down day, closed below yesterday’s low.
- Sell signal bar for double top with May 7 all-time high.
- Day after outside day usually largely overlaps the outside day so low probability sell setup.
- But since buy climax on all higher time frame, 10 to 20% correction can begin at any time so increased chance of big bear day tomorrow.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
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 Time
When I mention time, it is USA Pacific Time (the Emini day session opens at 6:30 am PT, and closes at 1:15 pm PT). You can read background information on the intraday market reports on the Market Update page.